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FIFTY YEARS IN 
WALL STREET 

» TWENTY-EIGHT YEARS IN WALL STREET," REVISED 

AND ENLARGED BY A RESUME OF THE PAST 

TWENTY-TWO YEARS, MAKING A RECORD 

OF FIFTY YEARS IN WALL STREET 

■ V 

BY 

Henry Clews, LL.D. 



SUBJECTS THAT ABE OF NECESSITY BRIEFLY TOUCHED 
UPON IN OBDER TO KEEP WITHIN THE SCOPE OF THE 
PRESENT WORK FIND FULLER EXPOSITION IN THE AU- 
THOR'S "WALL STREET POINT OF VIEW," FOR FURTHER 
REFERENCE TO WHICH SEE NOTICE AT THE END 



IRVING PUBLISHING COMPANY 
Post Office Box 1915, New York City 






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COPYEIGHT, 1908, 

By HENBY CLEWS 



PREFACE BY THE AUTHOR. 








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15 TO 17 BROAD STREET 

NEW YORK. 

To My Readers: 

The following pages are intended to throw some light on 
imperfectly known events connected with Wall Street specu- 
lations and investments, and also upon the condition and 
progress of the country from a financial standpoint, during 
the fifty years which I have experienced in the great money 
center. 

The theme is worthy of an abler pen, but in the absence 
of other contributors to this branch of our National history, 
I venture the plain narrative of an active participator in the 
financial events of the time in which I have lived. 

I have also made a brief retrospect of the history of Wall 
Street, and financial affairs connected therewith since the 
origin of the Stock Exchange in New York City. 

In sketching the men and events of Wall Street, I have 
freely employed the vernacular of the speculative fraternity 
as being best adapted to a true picture of their character- 
istics, although probably not most consonant with literary 
propriety. 

I have simply attempted to unfold a plain, unvarnished 
tale, drawing my material from experience and the records 
of reliable narrators. 

HENKY CLEWS. 

New York, March 31,^1908. 



CONTENTS. 



INTRODUCTORY. „.„_, 

My Part in Marketing the United States Civil War Loans xxxi 

CHAPTER I. 

MY DEBUT IN WALL STREET. 

Results of the Panic of 1857. — Creating a Revolution in the 
Methods of Doing Business m Wall Street.— The Old " Fo- 
gies " of the Street, and How They were Surprised. — Their 
Prejudices and How they Originated. — The Struggle of the 
Young Bloods for Membership. — The Youthful Element in 
Finance Peculiar to this Country. — The Palmy Days of 
Little, Drew and Morse. — The Origin of " Corners," and the 
" Option" Limit of Sixty Days. 5 

CHAPTER II. 

WALL STREET AS A CTVTLIZER. 

Clerical Obliquity of Judgment About Wall Street Affairs.— The 
Slanderous Eloquence of Talmage. — Wall Street a Great 
Distributor, as Exhibited in the Clearing House Transac- 
tions. — Popular Delusions in Regard to Speculation. — What 
Our Revolutionary Sires Advised About Improving the 
Industrial Arts, Showing the Striking Contrast Between 
Their Views and the Way Lord Salisbury Wanted to Fix 
Things for This Country...... 13 

CHAPTER III. 

HOW TO MAKE MONEY IN WALL STREET. 

How to Take Advantage of Periodical Panics in Order to Make 
Money. —Wholesome Advice toYoung Speculators. — Alleged 
" Points " from Big Speculators End in Loss or Disaster. — 
Professional Advice the Surest and Cheapest, and How and 
Where to Obtain It 19 

CHAPTER TV. 

IMPORTANCE OF BUSINESS TRAINING. 

Sons of Independent Gentlemen make very bad Clerks.— They 
become Unpopular with the Other Boys, and must Event- 
ually Go.— Night Dancing and Late Suppers don't Contrib- 
ute to Business Success. — Give Merit its True Reward — 
Keeping Worthless Pretense in its True Position. — Running 



Vlll. CONTENTS. 

PAGE. 
Public Offices on Business Principles. — A Pieee of Gratui- 
tous Advice for the Administration — A College Course not 
in General Calculated to make a Good Business Man.— The 
Question of Adaptability Important.— Children should be 
Encouraged in the Occupation for which they show a 
Preference.— Though ts on the Army and Navy 25 

CHAPTER V. 

PERSONAL HONOR OF WALL STREET MEN. 

Breach of Trust Rare Among Wall Street Men. — The English 
Clergyman's Notion of Talm age's Tirades A-gainst Wall 
Street. — Adventurous Thieves Have No Sympathisers 
Among Wall Street Operators.— Early Training Necessary 
for Success in Speculation.— Ferdinand Ward's Evil Genius. 
—A Great Business can only be Built up on Honest Prin- 
ciples. — Great Generals Make Poor Financiers, Through 
Want of Early Training.— Practical Business is the Best 
College 33 

CHAPTER VI. 

WALL STREET DURING THE WAR. 

The Financiers of Wall Street Assist the Government in the 
Hour of the Country's Peril. — The Issue of the Treasury 
Notes. — Jay Cooke's Northern Pacific Scheme Precipitates 
the Panic of 1873.— Wall Street Has Played a Prominent 
Part in the Great Evolution and Progress of the Present 
Age , 39 

CHAPTER VII. 

MORE WAR REMINISCENCES— BRITISH AND NAPOLEONIC DESIGNS. 

How Napoleon Defied the Monroe Doctrine.— The Banquet to 
Romero. — Speeches by Eminent FinaDciers, Jurists and 
Business Men. — The Eloquent Address of Romero Against 
French Intervention. — Napoleon shows his Animus by 
Destroying the Newspapers Containing the Report of the 
Banquet. — The Emperor Plotting with Representatives of 
the English Parliament to Aid the Confederates and Make 
War on the United States 45 

CHAPTER VIII. 

FOREIGN INTRIGUES AGAINST AMERICAN LIBERTY. 

How the Imperial Pirates of France and England Were Fright- 
. ened Off Through the Diplomacy of Seward. — Ominous 



CONTENTS. IX. 

PAGE. 
Appearance of the Russian Fleet in American Waters. — 
Napoleon Aims at the Creation of an Empire West of the 
Mississippi, and the Restoration of the Old French Colonies. 
—Plotting with Slidell, Benjamin, Lindsay, Roebuck and 
Others. — Urging England to Recognize the Confederacy. — 
Disraeli Explains England's Designs and Diplomacy.— After 
the Naval Victory of Farragut and the Capture of New 
Orleans England Hesitates Through Fear, and Napoleon 
Changes His Tactics. — Renewal of Intrigues Between Eng- 
land and France.— Their Dastardly Purposes Defeated by 
the Victories of Gettysburg, Vicksburg and the General 
Triumph of the Union Arms 59 

CHAPTER IX 

SECRETARY CHASE AND THE TREASURY. 

The Depleted Condition of the Treasury when Mr. Chase took 
Office. — Preparations for War and Great Excitement in 
Washington, — Chivalrous Southerners in a Ferment. — 
Officials Op in Arms in Defence of their Menaced Positions. 
— Miscalculation with Regard to the Probable Duration of 
the War.— A Visit to Washington and an Interview with 
' Secretary Chase.— Disappointment about the Sale of Gov- 
ernment Bonds. — A Panic Precipitated in Wall Street. — 
Millionaires Reduced to Indigence in a Few Hoars.— Mirac- 
ulously Saved from the Wreck.— How it Happened 73 

CHAPTER X, 

THE NATIONAL BANKS. 

Secretary Chase Considers the Problem of Providing a National 
Currency.— How E. G. Spaulding takes a Prominent Part 
in the Discussion of the Bank Act. —The Act Founded on 
the Bank Act of the State of New York. — Effect of the Act 
upon the Credit of the Country. — A New System of Bank- 
ing Required 81 

CHAPTER XI. 

THE NEW YORK STOCK EXCHANGE. 

History of the Organization for Ninety-four Years. — From a 
Button- Wood Tree to a Palace Costing Millions of Dollars. — 
Enormous Growth and Development of the Business.— How 
the Present Stock Exchange was Formed by the Consolida- 
tion of other Financial Bodies. — Patriotic Action During 
the War Period.— Reminiscences of Men and Events 87 



X ' CONTENTS. 



CHAPTER XII. PAOB - 

"CORNERS" AND THEIB EFFECT ON VALUES. 

The Senate Committee on "Corners" and " Futures. "-Specu- 

f vles eD ^ ial 1 " le C ° Untry at Lar ^- A *«"' 
Panic ><T ^ !, mp ° rtant **»* i° «« Prevention of 
Fames- Corners" in all kinds of Business. -How A T 

Plture^ r'' C ? rner8 "- AU Imp0rti ^ Fi ™ **- * 
EnteZt ; SISlatiOD AgaiDSt "Corners" would stop 
Enterpr.se and eause Stagnation in Business-Only the 
Consp lra tors themselves get hurt in " Corners."-The Black 
™™ C — -"-Speeulation in Grain Beneficial to Cot 



91 



CHAPTER XIII. 

THE COMMODORE'S " CORNERS " 

Th 'B!s r s e " t f u t on ,'; c r er -"- oommodore vana - bi]t «* 

boss of the Situation—The "Corner" Forced upon 

turn the Stock, and then caught them. -His able 
Device of Unloading while Forcing the Bears to Cover a 
H,gh Figures—The Harlem "Corner." _ The Common 
Council Betrayed the Commodore, but were Caught in the" 
cwn Trap, and Lost Millions-Tbe Legislature Attempt the 
same Game, and meet with a Similar late. ....„."!*. .! 107 

CHAPTER XIV. 

DANIEL DREW. 

Drew like Vanderbilt, an Example of Great Success without 
Education-Controlled more Ready Cash than any mlnTn 
America-Drew goes Down as Gould Rises-" isTonch 

ioufv .I' " 011 ° f DreWS M1 - His Thirteen m£ 
lions Vanish-How he caught the Operators in " Oshkosh " 
by the Handkerchief Triek-The Beginning of "Un C ,e 
Daniel's" Troubles-The Convertible Bond Trick -The 
"Corner" of 1 866- M illion s Lost and Won in a Dav - 
Interesting Anecdote of the Youth who Speculated oSde 

the Pool, and was Fed by Drew's Brokers ° .._ „, 

CHAPTER XV. 

DREW AND VANDERBILT. 

VanderbUt Essays to Swallow Erie, and Has a Narrow Escape 
from Choklng-He Tries to make Drew Commit Financfal 
Suicide-Manipulating the Stock Market and the Law 
Courts at the Same Time-Attempts to "Tie TJp" Z 



CONTENTS. XI. 

PAGE. 

Hands of Drew.— Manufacturing Bonds with the Erie Paper 
Mill and Printing Press. — Fisk Steals the Books and Evades 
the Injunction. —Drew Throws Fifty Thousand Shares on 
the Market and Defeats the Commodore. — The "Corner" 
is Broken and Becomes a Boomerang. — Vanderbilt's Fury 
Knows no Bounds. — In his Rage he Applies to the Courts. — 
The Clique's Inglorious Flight to Jersey City. — Drew Crosses 
the Ferry with Seven Millions of Vanderbilt's Money. — The 
Commodore's Attempt to Reach the Refugees. — A Detective 
Bribes a Waiter at Taylor's Hotel, who Delivers the Com- 
modore's Letter, which Brings Drew to Terms. — Senator 
Mattoon gets on the right side of Both Parties 127 

CHAPTER XVI. 

DREW AND THE ERIE "CORNERS." 

A Harmonious Understanding with the Commodore. — How the 
Compromise was Effected. — An Interesting Interview with 
Fisk and Gould in the Commodore's Bed-Room. — How 
Richard Schell Raised the Wind for the n Commodore.— 
Drew's Share of the Spoils.— He Tries to Retire from Wall 
Street, but Can't. — The Settlement that Cost Erie Nine Mil- 
lions. — Gould and Fisk "Water " Erie again, to the Extent of 
Twenty-three Millions, but leave Drew out. — "Uncle 
Daniel " Returns to the Street. — He is Inveigled into a 
Blind Pool by Gould and Fisk, Loses a Million and Retreats 
from the Pool.— He then Operates Alone on the "Short" 
Side and Throws Away Millions. — He Tries Prayer but it 
" Availeth Not." — " It's do Use, Brother, the Market Still 
Goes Up." — Praying and Watching the Ticker. — Hope 
lessly " Cornered " and Ruined by his Former Pupils and 
Partners 137 

CHAPTER XVTI. 

INTERESTING EPISODES IN DREW'S LIFE. 

Incidents in the Early Life of Drew, and How he Began to 
Make Money. — He Borrows Money from Henry Astor, Buys 
Cattle in Ohio and Drives them over the Alleghany Moun- 
tains under Great Hardship and Suffering.— His Great 
Career as a Steamboat Man, and his Opposition to Vander- 
bilt.— His Marriage and Family. — He Builds and Endows 
Religious and Educational Institutions.— Returns to his 
Old Home after his Speculative Fall, but can find No Rest 
so Far away from Wall Street.— His Hopes through Wm. H. 
Vanderbilt of another Start in Life.— His Bankruptcy, 



2C11 

CONTENTS. 



Ch?r^ eS -T 7 ararobe -Hi S Sudden but Peaceful Eud - '"* 
Characteristic Stories of his Ecceulricities . . . 147 

CHAPTER XVIII. 

PAKIC8.-THEIR CACSES.-HOW FAB PREVENTABLE. 

NOt R: ue d e e r s tal T t e o kS °f. the Market -^ - Stiil a Nation of 
Vofeut o7ef,t Q °:° f Pani ° S P ^«l'arl y American.- 
New^L t SmTrade 0win * to the G««t Mass of 

.ntrfn Q " m , mature Uudertakiugs.- Un eertaiuty aboutthe 
Intans.c Value of Properties.- Sudden Shrinkage of RaTl! 
road Properties a Fruitful Cause of Panics -Risks and 
Paa.cs Inseparable from Pioneering Enterprise lw e Tre 
ST. 1 ? D ~°* » t«e Money Marked Tf 

Eno.— Ferdinand Ward — Th* m • „ oe ney. John C. 
tire of Panics... .. ! Z! . . g H ° USe as a Preven - 

CHAPTER XIX. 

OLD-TIME PANICS. 

^Bant-Howtb"^ * ™ Br ^bt About.-Tbe State 
mtntP^r y EXPan<ied their Loans n »d«r Govern- 
ment Patronage.-Speculation was Stimulated and YaluTs 

Finure! m Pao '«=-Bank Contractions and Consequent 
Fmlmes.-Mixmg up Business and Politics.-A General 
Collapse, with Intense Suffering General 



167 



175 



CHAPTER XX. 

THE TB*E ST0 BV OE BLACE EBtBAV TOLB EOB THE EtBST TtME. 

The Great Black Friday Scheme originates in patriotic motives 
Adv,s,ng Boutwelland Grant to sell Gold -The™? T 
Fisk played in the Speculative Drama-' Gone h .7 
Woodbine Twmeth."_A general stat^ „r ™ ^ere the 
a*™ + tt fe«iierai state of Chaos in Wall 

Street. -How the Israelite Fainted -» Wh*t i-w* L 

and Compromise him and his Family in the X s™ 

and incidents of the Great Speculative DraTnl ll . . 181 



CONTENTS. Xlll. 

PAGE. 
CHAPTER XXI. 

CAUSES OF LOSS IN SPECULATION. 

Inadequate Information.— False Information. — Defects of News 
Agencies.— Insufficiency of Margins. — Dangers of Personal 
Idiosyncrasies.— Operating in Season and out of Season.— 
Necessity of Intelligence, Judgment and Nerve.— An Ideal 
Standard.— What Makes a King Among Speculators ? 201 

CHAPTER XXII. 

VTLLARD AND HIS SPECULATIONS. 

Return of the Renowned Speculator to Wall Street.— Recalling 
the Famous u Blind " Pool in Northern Pacific— How Vil- 
lard Captured Northern Pacific— Pursuing the Tactics of 
Old Vanderbilt.— Raising Twelve Million Dollars on Paper 
Credit.— Villard Emerges from the "Blind" Pool a Great 
Railroad Magnate.— He Inflates his Great Scheme from 
Nothing to One Hundred Million Dollars.— His Unique 
Methods of Watering Stock as Compared with those of 
George I. Seney 209 

CHAPTER XXIII. 

FERDINAND WARD. 

Peculiar Power and Methods of the Prince of Swindlers.— How 
he Duped Astute Financiers and Business Men of all Sorts, 
and Secured the Support of Eminent Statesmen and Lead- 
ing Bank Officers, whom he Robbed of Millions of Money — 
The most Artful Dodger of Modern Times. — The Truth about 
the Swindle Practiced upon General Grant and his Family. 215 

CHAPTER XXIV. 

HENRY N. SMITH. 

How Mr. Smith Started in Life and became a Successful Oper- 
ator. — His connection with the Tweed •• Ring," and how he 
and the Famous " Boss " made Lucky Speculations, through 
the use of the City Funds, in Making a Tight Money Mar- 
ket. — On the Verge of Ruin in a Pool with W. K. Vander- 
bilt. — He is Converted to the Bear Side by Woerishoffer, 
and Again Makes Money, but by Persistence in his Bearish 
Policy Ruins himself and Drags Wm. Heath & Co. down 
also 223 



XIV. CONTENTS. 

PAGE 
CHAPTER XXV. 

KEENE'S CAREER. 

He Starts in Speculation as a " Curbstone" Broker.— A Lucky 
Hit in a Mining Stock Puts Him on the Road to be a Mil- 
lionaire. — His Speculative Encounter with the Bonanza 
Kings. — He Makes Four Millions, and Major Selover brings 
him to Wall Street, where they Form an Alliance with 
Gould, Who "Euchres" Both of Them.— Selover Drops 
Gould in an Area Way.— Keene Goes Alone and Adds Nine 
Millions More to His Fortune.— He Then Speculates Reck- 
lessly in Everything.— Suffers a Sudden Reversal and Gets 
Swamped. — Overwhelming Disaster in a Bear Campaign, 
Led by Gould and Cammack, in which Eeene Loses Seven 
Millions.— His Desperate Attempts to Recover a Part Entail 
Further Losses, and He Approaches the End of His Thir- 
teen Millions.— His Princely Liberality and Social Relations 
with Sam Ward and Others , 229 

CHAPTER XXVI. 

OUR RAILROAD METHODS, 

Deceptive Financiering. — Over-Capitalization. — Stock * Water- 
ing." — Financial Reconstructions. — Losses to the Public. — 
Profits of Constructors.— Bad Reputation of our Railroad 
Securities. — Unjust and Dangerous Distribution of the 
Public Wealth '. 241 

CHAPTER XXVII. 

THE GEORGIA BO^ REPUDIATION. 

How a Sovereign Southern State Cheated the Northern Men 
who Helped Her in Distress.. — A New Way to Pay Old 
Debts. — Cancellation by Repudiation of Just Claims for 
Cash Loaned to Sustain the State Government, Build Public 
Schools and Make Needed Improvements. — Bottom Facts 
of the Outrage. — The Recent Attempt to Place a New 
Issue of Georgia Bonds on the Market while the Old ones 
Remain Unpaid. — The Case before Ihe Attorney-General of 
the State of New York. — He Examines the Legal Status of 
the Bonds in Connection with the Savings Banks.— His 
Decision Prohibits these Institutions from Investing the 
Hard Earnings of the Working People in these Doubtful 
and Dangerous Securities.— A Bold Effort to have the Fresh 
Issue of Georgia Paper put upon the List of Legitimate 
Securities of the New York Stock Exchange Firmly Opposed 
and Eventually Frustrated 255 



CONTENTS. XV, 

PAGE. 

CHAPTER XXVIII. 

ANDREW JOHNSON'S VAGARIES. 

"Swinging Around the Circle.'' — How Mr. Johnson Came to 
Visit New York on His Remarkable Tour. — The Grand Re- 
ception at Delmonico's. — The President Loses His Temper 
at Albany and Becomes an Object of Public Ridicule. — His 
Proclamation of "My Policy" Ironically Received. — Re- 
turns to Washington Disgraced. — The Massacre of New 
Orleans. — The Impeachment of the President..... 289 

CHAPTER XXIX. 

THE DIX CONVENTION. 

How the War Democrat, General Dix, was Elected Governor 
by the Republican Party. — The Candidates of Senator 
Conkling Rejected. — How Dix was Sprung on the Conven- 
tion, to the Consternation of the Caucus. — Judge Robert- 
son's Disappointment. — Exciting Scenes in the Convention. 
— General Dix declines the Nomination, but Reconsiders 
and Accepts on the Advice of His Wife and General Grant. 
— How Dix's Election Ensures Grant's Second Term as 
President 297 

CHAPTER XXX. 

CONSEQUENCES OF THE UTICA (DIX'S) CONVENTION. 

A Chapter of Secret History. — Conkling gets the Credit for 
Dix's Nomination and His " Silence Gives Consent " to the 
Honor. — Robertson Regards Him as a Marplot. — The Sena- 
tor Innocently Condemned. — The Misunderstanding which 
Defeated Grant for the Third Term, and Elected Garfield. 
— How the Noble " 306 " were Discomfited. — " Anything to 
Beat Grant." — The Stalwarts and the Half Breeds.—" Me 
Too. " — The Excitement which Aroused Guiteau's Murderous 
Spirit to Kill Garfield 307 

CHAPTER XXXI. 

GRANT'S SECOND TERM. 

The Best Man for the Position and Most Deserving of the 
Honor. — How the "Boom" was Worked up in Favor of 
Grant. — The Great Financiers and Speculators all Come to 
the Front in the Interest of the Nation's Prosperity and of 
the Man who had Saved the Country.— The Great Mass 
Meeting at Cooper Union. — Why A. T. Stewart Refused to 
Preside. — The Results of the Mass Meeting and how they 



XVI. CONTENTS. 

rAGE. 
were Appreciated by the Friends of the Candidate, Leading 
Representatives of the Business Community and the Public 
Press Generally, Irrespective of Party 313 

CHAPTER XXXII. 

THE TWEED RING, AND THE COMMITTEE OF SEVENTY, 

The Ring Makes Itself Useful in Speculative Deals.— How 
Tweed and His " Heelers " Manipulated the Money Market. 
— The Ring Conspiring to Organize a Panic for Political 
Purposes. — The Plot to Gain a Democratic Victory Defeated 
and a Panic Averted Through President Grant and Secre- 
tary Boutwell, who were Apprised of the Danger by Wall 
Street Men. — How the Committee of "Seventy" Origin- 
ated. — The Taxpayers Terrorized by Boss Tweed and his 
Minions. — How " Slippery Dick " got Himself Whitewashed. 
— Offering the Office of City Chamberlain as a Bribe to 
Compromise Matters. — How the Hon. Samuel Jones Tilden, 
as Counsel to the Committee, Obtained His Great Start in 
Life 327 

CHAPTER XXXIII. 

HON. SAMUEL J. TILDEN. 

How Tilden began to make His Fortune in Connection with 
William H. Havemeyer. — Tilden's great Fort in Politics. — 
He Improves His Opportunity with the Discernment of 
Genius.— How Tilden became one of the Counsel of the 
11 Committee of Seventy."— His Political Elevation and 
Fame dating from this Lucky Event. — The Sage of Grey- 
stone a Truly Great Man. — Attains Marvellous Success by 
His own Industry and Brain Power.— He not only Deserved 
8uccess and Respect, but Commanded them. — How his 
Large Generosity was Manifested in His Last Will and 
Testament. — The Attempt to Break that Precious Public 
Document 337 

.CHAPTER XXXIV. 

COMMODORE VANDERBILT. — HOW HIS MAMMOTH FORTUNE WAS 
ACCUMULATED. 

Ferryman.— Steamboat Owner. — Runs a Great Commercial 
Fleet.— The First and Greatest of Railroad Kings. — The 
Harlem " Corner." — Reorganization of N. Y. Central. — How 
He Milked the Street, and Euchred His Co-Speculators. — 
His Fortune.— Its Vast Increase by Wm. H 345 



CONTENTS. XV1L 

PAGE. 
CHAPTER XXXV. 

TW. H. VANDERBILT. 

A Builder instead of a Destroyer of Public Values.— His Re- 
spect for Public Opinion on the Subject of Monopolies. — 
His first Experience in Railroad Mauagement. — How he Im- 
proved the Harlem Railroad Property.— His great Executive 
Power manifested in every stage of advance until he be- 
came President of the Vanderbilt Consolidated System.— 
An Indefatigable Worker.— His habit of Scrutinizing Every 
Detail.— His Prudent Action in the Great Strike of 1877, 
and its Good Results.— Settled all misunderstandings by 
Peace and Arbitration.— Makes Princely Presents to his 
Sisters.— The Singular Gratitude of a Brother-in-Law.— 
How he Compromises by a Gift of a Million with Young 
Corneel.— Gladstone's Idea of the Vanderbilt Fortune- 
Interview of Chauncey M. Depew with the G. O. M. on 
the subject. — The great Vanderbilt Mansion and the Cele- 
brated Ball.— The Immense Picture Gallery.— Mr. Vander- 
bilt Visits some of the Famous Artists.— His Love of Fast 
Horses. — A Patron of Publio Institutions.— His Gift to the 
Waiter Students.— While Sensitive to Public Opinion, has no 
fear of Threats or Blackmailers. — The Public be Damned. 
—Explanation of the rash Expression. — The Purchase of 
" Nickel Plate." — His Declining Health and Last Days. — 
His Will, and Wise Method of Distributing 200 Millions.— 
Effects of this Colossal Fortune on Public Sentiment 355 

CHAPTER XXXVI. 

*' YOUNG CORNEEL." 

The Eccentricities of Cornelius Jeremiah Vanderbilt, and his 
Marvellous Power for Borrowing Money. — He Exercises 
Wonderful Influence over Greeley and Colfax. — A Dinner at 
the Club with Young " Corneel " and the Famous " Smiler." 
— " Corneel " tries to make himself Solid with Jay Cooke.— 
The Commodore Refuses to Pay Greeley.—" Who the 
Devil Asked You?" retorted Greeley. — "Corneel's" mar- 
riage to a Charming and Devoted Woman.— How She 
Softened the Obdurate Heart of her Father-in-Law 375 

CHAPTER XXXVII. 

THE YOUNG VANDERBILTS AND THEIR FORTUNES. 

Remarkable for Physical and Intellectual Ability. — The Mixture 
of Races and the Law of Selection.— TheWonderful Will and 



XVllTfo CONTENTS. 



PAG& 



the Wise Distribution of Two Hundred Millions. — Tastes, 
Habits and Social Proclivities of the Young Vanderbilts.— 
The Married Relations of Some of Them.— Being Happily 
Assorted they Make Good Husbands.— Their Property Re- 
garded as a Great Trust.— Their Railroad System and its 
Great Army of Employes. — The Young Men Cautious About 
Speculating, and Conservative m their Expenses Generally 387 

CHAPTER XXXVIII. 

THE KOTHSCHILDS. 

The Beginning of the Financial Career of the Great House of 
Rothschild. — The Hessian Blood Money was the Great 
Foundation of their Fortune.— How the Firm of the Five 
Original Brothers was Constituted. — Nathan the Greatest 
Speculator of the Family. — His Career in Great Britain, and 
how he Misrepresented the Result of the ''Battle of Water- 
loo" for Speculative Purposes. — Creating a Panic on the 
London Stock Exchange. — His Terror of being Assassinated. 
— His Death Causes a Panic on the London Exchange and 

the Bourses 897 

CHAPTER XXXIX. 

TRAVERS. 

The Unique Character of Travers. — His Versatile Attainments. 
— Although of a Genial and Humorous Disposition, He was 
Always a Bear.— How He was the Means of Preserv- 
ing the Commercial Supremacy of New York. — He Squashes 
the English Bravado, and Saves the Oratorical Honor of 
Our Country.— Has the Oyster Brains? — It Must have 
Brains, for it Knows Enough to Sh-sh-shut Up. — The Dog 
and the Rat. — I d-d-don't want to Buy the D-d-dog ; I will 
Buy the R-r-rat.— Travers on the Royal Stand at the Derby. 
—How He was Euchred by the Pool-Seller —My Proxy in a 
Speech at the Union Club.— If You are a S-s-self-made 
Man, Wh-wh-y the D-devil didn't You put more H-hair on 
the Top of Your Head?— Other Witticisms, &c— Death of 
the Great Wit and Humorist, and some of His Last Witty 
Sayings 40? 

CHAPTER XL. 

CHARLES F. WOERISHOFFEB 

The Career of Charles F. Woerishoffer and the Resultant Effect 
upon Succeeding Generations. — The Peouliar Power of the 
Great Leader of the Bear Element in Wall Street — His 
Methods as Compared with Those of Other Wreckers of 



-f- 



CONTENTS. XIX. 

PAGE. 
Values. —A Bismarck Idea of Aggressiveness the Ruling 
Element of His Business Life.— His Grand Attack on the 
Villard Properties, and the Consequence Thereof. — His 
Benefactions to Faithful Friends 425 

CHAPTER XLI. 

WOMEN AS SPECULATORS. 

Wall Street no Place for Women. — They Lack the Mental 
Equipment. — False Defenses of Feminine Financiers. — The 
Claflin Sisters and Commodore Vanderbilt. — Fortune and 
Reputation Alike Endangered '.. 437 

CHAPTER XLII. 
WESTEEN millionaires in new yore. 
Eastward the Star of Wealth and the Tide of Beauty Take 
their Course. — Influence of the Fair Sex on this Tendency, 
and Why. — New York the Great Magnet of the Country. — 
Swinging into the Tide of Fashion.— Collis P. Huntington. — 
His Career from Penury to the Possessor of Thirty Mil- 
lions. — Leland Stanford — first a Lawyer in Albany, and 
afterward a Speculator on the Pacific Coast. — Has Rolled 
Up nearly Forty Millions. — D. O. Mills — an Astute and 
Bold Financier. — Courage and Caution Combined. — His 
Rapid Rise in California — He Makes a Fortune by Invest- 
ing in Lake Shore Stock. — Princes of the Pacific Slope. — 
Mackay, Flood and Fair. —Their Rise and Progress. — Wil- 
liam Sharon —A Brief Account of His Great Success. — Wm» 
C. Ralston and His Daring Speculations. — Begins a Poor 
New York Boy, and Makes a Fortune in California. — John 
P. Jones. — His Eventful Career and Political Progress. 
— " Lucky " Baldwin.— His Business Ability and Advance- 
ment.— Lucky Speculations. — Amasses Ten or Fifteen Mil- 
lions. — William A. Stewart. — Discovers the Eureka Placer 
Diggings. — His Success as a Lawyer and in Mining Enter- 
prises. — James Lick. — One of the Most Eccentric of the 
California Magnates.— Real Estate Speculations. — His Be- 
quest to the Author of the " Star Spangled Banner." — 
John W, Shaw, Speculator and Lawyer 447 

CHAPTER XLIII. 

RAILROAD INVESTMENTS. 

Vastness of our Railroad System. — Its Cost. — Fall in the Rate 
of Interest. — Tendency to a Four Per Cent. Rate on Rail- 



Q 



XX. CONTENTS. 

PAGIi 
road Bonds. — Effect of the Change on Stocks. — Prospective 
Speculation. — Some Social Inequities to beAdjusted through 
Cheaper Transportation 475 

CHAPTER XLIV. 

THE SILVER QUESTION. 

Its Fundamental Importance. — Dangers of Neglecting it. — 
Attempts at Evasion. — How it must be Finally met. — Sil- 
ver Paper Currency Schemes, and their Futility 481 

CHAPTER XLV. 

THE LABOR QUESTION. 

Harmony Between the Representatives of Capital and Labor 
Necessary for Business Prosperity. — If Manufacturers 
should Combine to Regulate Wages the Arrangement could 
only be Temporary. — The Workingmen are Taken Care of 
by the Natural Laws of Trade. — Competition among the 
Capitalists Sustains the Rate of Wages. — Opinion of John 
Stuart Mill on this Subject. — Compelling a Uniform Rate 
of Pay is a Gross Injustice to the Most Skilful Workmen. — 
The Tendency of the Trades Unions to Debar the Working- 
man from Social Elevation. — The Power of the Unions 
Brought to a Test—The Universal Failure of the Strikes. — 
Revolutionary Demands of the Knights of Labor. — Gould 
and the Strikes on the Missouri Pacific, &c, &c 491 

CHAPTER XLVI. 

AN IMPORTANT SYNOPSIS. 

A Resume in Brief of the Leading Events Connected with 

Wall Street Affairs for Seventy-seven Years 503 

CHAPTER XL VII. 

INTERNATIONAL SIGNIFICANCE OP THE BARTHOLDI STATUE. 

Great as an Achievement of Art, but Greater as the Embodi- 
ment of the Idea of Universal Freedom the World Over. — 
It is a Poetic Idea of a Universal Republic. — Enlightenment 
of the World Must Result in the Freedom of Man 526 

CHAPTER XLVIII. 

LARGE FORTUNES AND THEIR DISPOSITION. 

How the Fortunes of the Astors were Made.— George Peabody 
and His Philanthropic Schemes. — Johns Hopkins and his 
Peculiarities. — A. T. Stewart and his Abortive Plans. — A 



CONTENTS. XX1. 

PAGE. 

Sculptor's Opinion of his Head. — Eccentricities of Stephen 
Qirard, and How he Treated his Poor Sister. — His Penuri- 
ous Habits and Great Donations. — James Lenox and the 
Library which he Left.— How Peter Cooper Made his For- 
tune, and his Liberal Gifts to the Cause of Education. — 
Samuel J. Tilden's Munificent Bequests.— The Vanderbilt 
Clinic. — Lick, Corcoran, Stevens and Catharine Wolf... 529 

CHAPTER XLIX. 

SOUTHERN AFFAIRS IN SPECULATION. 

The Preservation of the Union a Great Blessing. — To Let them 
" Secesh " would have been National Suicide. — How Immi- 
gration has Assisted National Prosperity. — Rescued from 
the Dynastic Oppression of European Governments. — 
Showing Good Fellowship towards the Southern People and 
Aiding them in their Internal Improvements. —The South, 
Immediately after the War, had Greater Advantages than 
the North for Making Material Progress. — The Business of 
the North was Inflated. — The States of Georgia and Ala- 
bama Offered Inviting Fields for Investment.— Issuing 
State Securities, Cheating and Repudiating. — President 
Johnson Chiefly to Blame for the Breach of Faith with 
Investors who were Swindled out of their Money.— Revenge 
and Avarice Unite in Financial Repudiation 541 

CHAPTER L. 

WESTERN AND SOUTHERN FINANCIAL LEADERS. 

Alfred Sully, his Origin and Successful Career. — Calvin S. 
Brice, a Financier of Ability. — General Samuel Thomas, 
Prominent in the Southern Railroad System. — General 
Thomas M. Logan, a Successful Man in Railroading and 
Mining. — Financial Chieftains of Baltimore. — The Garretts. 
—Their Great Success as Railroad Managers. — Portrait of 
Robert Garrett ... 553 

CHAPTER LI. 

ARBITRATION. 

How the System of Settling Disputes and Misunderstandings 
by Arbitration has Worked in the Stock Exchange. — Why 
not Extend the System to Business Matters Generally ? — 
Its Great Advantages over Going to Law. — It is Cheap and 
has no Vexatious Delays. — Trial by Jury a Partial Failure. 
— Some Prominent Cases in Point. — Jury " Fixing" and its 



xxii. CONTENTS. 

PACE 
Consequences.— How Juries are Swayed by their Sympa- 
thies. — A Curious Miscarriage of Justice before a Referee.— 
The Little Game of the Diamond Broker 561 

CHAPTER LII. 

NEW YOKE AS A FINANCIAL CENTRE. 

Its Past, Its Present, Its Future. — Banking Decadence. — 
Growth of Interior Centres. — Obstruction from the National 
Bank Laws. — Relief Demanded. — Requirements of the 
Future 577 

CHAPTER LIII. 

EARTHQUAKE THEORIES AND WALL STREET AFFAIRS. 

The Shock of Every Calamity Felt in Wall Street. — Earthquakes 
the only Disasters which seem to Defy the Power of Pre- 
caution. — Becoming a Subject of Serious Thought for Wall 
Street Men and Business Men.— The Volcanic Theory of 
Earthquakes. — Other Causes at Work Producing these 
Terrific Upheavals. — Why Charleston was more Severely 
Shaken Up than New York. — Why the Southern Earth- 
quake did not Strike Wall Street with Great Force. — Earth- 
quakes Likely to Become the Great Disasters of the Future. 589 

CHAPTER LIV. 

AUGUST BELMONT. ^ 

The American Representative of the Rothschilds— Begins Life 
in the Rothschilds' House in Frankfort. — Consul General to 
Austria and Minister to the Hague. — A Great Financier 
and a Connoisseur in Art £i5 

CHAPTER LV. 

THE SOCIALIST OBJECTIONS TO THE PRESENT ORDER OF SOCIETY EX 

AM1NED. 

Increase of Population and the Growing Pressure upon the 
Means of Subsistence.— Education and Moral Improvement 
the True Remedy for Existing or Threatened Evils.— Errors 
of Communism and Socialism. — How Socialistic Leaders 
and Philosophers Recognize the Truth. — Growth of Popu- 
lation Does Not Mean Poverty &99 

CHAPTER LVI. 

STOCK EXCHANGE CELEBRITIES. 

How Wall Street Bankers' Nerves are Tried. — Fine Humor, 
Jocular Dispositions, and Scholarly Taste of Operators.— * 



CONTENTS. XX111. 

PAGE. 

George Gould as a Future Financial Power.— American 
Nobility Compared with European Aristocracy.— How the 
Irish Can Assist to Purge Great Britain of her Bilious 
Incubus of Nobility. -The Natural Nobility of Our Own 
Country and Their Destiny 603 

CHAPTEE LYII. 

A LOOK INTO THE FUTUBE. 

What We Are.— What We are Preparing For.— What We are 
Destined to Do and to Become.— We are Entering on an 
Era of Seeming Impossibilities.— Yet the Inconceivable 
Will be Realized ;;. 611 

CHAPTER LYIII. 

JAY GOULD. 

His Birth and Early Education.- Clerk in a Country Store.— 
He Invents a Mouse Trap.— Becomes a Civil Engineer and 
Surveys Delaware County.— Writes a Book and Sells it. — 
Gets a Partnership in a Pennsylvania Tannery and soon 
Buys his Partner Out.— He comes to New York to Sell his 
Leather, falls in Love with a Leather Merchant's Daugh- 
ter and Marries her.— Settles in the Metropolis and begins 
to Deal in Railroads.— Buys a Bankrupt Road from his 
Father-in-law, Reorganizes it and Sells it at a Consider- 
able Profit.— Henceforth he makes his Money Dealing in 
Railroads.— His Method of Buying, Reoganizing and Sell- 
ing Out at a Large Profit.— How he Managed Erie in con- 
nection with Fisk and Drew.— His Operations on Black 
Friday.— Checkmated by Commodore Vanderbilt and 
obliged to Settle.— He makes Millions out of Wabash and 
Kansas & Texas.— His Venture in Union Pacific— His 
Construction Companies.— Organization of American 
Union Telegraph, and his Method of Absorbing and Get- 
ting Control of Western Union.— The Strike of the Tel- 
egraphers and his Great Encounter with the Knights of 
Labor and Trades Unionist.— Gould's First Yachting 
Expedition.— An exceedingly Humerous Story of his early 
Experience on the Water.— His Status as a Factor in Rail- 
road Management. ... — 619 

CHAPTER LIX. 

MEN OF MARK. 

Cyrus W. Field.— Russell Sage.— Addison Cammack.— The 
Jerome Brothers.— Moses Taylor.— Chauncey M. Depew. — 



XXIV CONTENTS. 

PAGE 
Austin Corbin. — Anthony J. Drexel. — John A. Stewart. — Hon. 
Levi P. Morton. — Philip D. Armour. — Stedman, the Poet. — 
Stephen V. White. — H. Victor Newcomb. — James M. Brown. — 
Former Giants of the Street. — Henry Keep. — Anthony W. Morse 659 

CHAPTER LX. 
James B. and John H. Clews. 683 

CHAPTER LXI. 

A Remarkable Chapter of History 685 

CHAPTER LXII. 
Booms in Wall Street 700 

CHAPTER LXIII. 
A Glimpse into the Future 716 

CHAPTER LXIV. 

My Christmas Address to Customers, December 24, 1906 724 

CHAPTER LXV. 
Edward H. Harriman 726 

CHAPTER LXVI. 
The Ups and Downs of Wall Street . . 728 

CHAPTER LXVII. 
Recent Wall Street Booms 744 

CHAPTER LXVIII. 
Wall Street's Wild Speculation, 1900-1904 755 

CHAPTER LXIX. 
Review of the Panic Year, 1903 771 

CHAPTER LXX. 
Leading Wall Street Events up to the Fall of 1907 774 

CHAPTER LXXI. 
The Great Crisis of 1907 790 

CHAPTER LXXII. 
The Causes of the Crisis of 1907 797 

CHAPTER LXXIII. 

RECENT MEN OF MARK. 

Charles M. Schwab. — Daniel Gray Reid. — Thomas Fortune Ryan. — 
John Warne Gates. — August Belmont. — William H. Moore. — 
V Anthony Nicholas Brady. — Stuyvesant Fish 801 



CONTENTS. XXV 

CHAPTER LXXIV. page 

Needed Publicity and Reform in Corporations 807 

CHAPTER LXXV. 
The Monetary Situation and its Remedies 822 

CHAPTER LXXVI. 
Individuality versus Socialism 836 

CHAPTER LXXVII. 
Great Wealth and Social Unrest 855 

CHAPTER LXXVIII. 

The Financial Situation 879 

CHAPTER LXXIX. 

Table showing Dates of Admission of the Members of the New York 

Stock Exchange 913 

CHAPTER LXXX. 

England and Russia in our Great Civil War and the War between 

Russia and Japan 917 

CHAPTER LXXXI. 

The Crisis of 1907 and its Causes. Was President Roosevelt to 

Blame? 927 

CHAPTER LXXXII. 
Our Great American Panics from First to Last 943 

CHAPTER LXXXIII. 
Wall Street as It Really Is. A Vindication 955 

CHAPTER LXXXIV. 

The Financial and Trade Situation, Past, Present and Future, Re- 
viewing the Crisis of 1907, with Causes and Remedies 964 

CHAPTER LXXXV. 
American Social Conditions 1001 

CHAPTER LXXXVI. 
Financial and Trade Situation and Prospects 1014 

CHAPTER LXXXVII. 

Peace Assurances from Japan 1033 

CHAPTER LXXXVIII. 

The Emperor of Japan 1037 

CHAPTER LXXXIX. 

The National Corporation Problem 1045 

Conclusion 



ILLUSTRATIONS. 



PAGE, 




PAGE. 


Henry Clews . . Frontispiece 


George J. Gould 


. 607 


Mills Building .... 


5 


Jay Gould . 


. 619 


Parents of Henry Clews 


7 


Cyrus W. Field . 


. 659 


Birthplace of Henry Clews 


9 


P. D. Armour . 


. 661 


Map of U. S. by Henry Clews . 


11 


Levi P. Morton . 


. 663 


Jacob Little .... 


13 


J. A. Stewart 


. 665 


Salmon P. Chase 


39 


A. J. Drexel 


. 667 


John Sherman ... 


73 


Leonard W. Jerome . 


. 669 


E. G. Spaulding. 


81 


Addison Cammack . 


. 671 


New York Stock Exchange 




Russell Sage 


. 673 


(exterior) .... 


87 


Chauncey M. Depew 


. 675 


New York Stock Exchange 




James M. Brown 


. 677 


(interior) .... 


91 


E. C. Stedman . 


. 679 


Daniel Drew . 


117 


H. Victor Newcomb . 


. 681 


George I. Seney . . 


175 


Moses Taylor 


. 683 


Henry Villard . . . . 


209 


Thomas L. James 


. 685 


Georgia State Bond . 


255 


John H. Clews . 


. 687 


Samuel J. Tilden 


337 


James B. Clews . 


. 689 


Commodore Vanderbilt . 


345 


Roswell P. Flower . 


. 691 


W. H. Vanderbilt . . . 


355 


J. Pierpont Morgan . 


. 693 


Cornelius Vanderbilt 


387 


John D. Rockefeller . 


. 701 


W. K. Vanderbilt . 


389 


William Rockefeller . 


. 713 


F. W. Vanderbilt . 


393 


Henry H. Rogers 


. 729 


Three Rothschilds . 


397 


John D. Archbold 


. 735 


Nathan Rothschild . 


401 


Edward H. Harriman 


. 793 


W. R. Travers ... 


407 


Wm. H. Moore . 


. 821 


C. P. Huntington 


451 


Daniel G. Reid . 


. 843 


Leland Stanford 


455 


Thomas F. Ryan 


. 849 


D.O.Mills .... 


457 


John W. Gates . 


. 853 


Charles Crocker 


459 


Chas. M. Schwab 


. 869 


John W. Mackay 


461 


August Belmont 


. 879 


James C. Flood .... 


463 


Anthony N. Brady . 


. 881 


James G. Fair .... 


465 


Stuyvesant Fish 


. 903 


Robert Garrett . . . . 


553 


William E. Gladstone 


.921 


August Belmont 


595 


Facsimile, Gladstone let 


ter . 923 



DEDICATION 

TO THE 

VETERANS OF WALL STREET, 

MOST OF WHOM I HAVE KNOWN PERSONALLY. 



My Dear Friends: 

I have attempted, in the following pages, to relate in a simple 
and comprehensive manner, without any aim at elaboration, 
the leading features of the most prominent events that have 
come within the sphere of my personal knowledge and experi- 
ence during the twenty-eight years of my busy life in Wall 
street. I have never kept a diary regularly, but have been oc- 
casionally in the habit of preserving certain memoranda in the 
form of letters, and a few scraps from the newspapers at vari- 
ous times. With these imperfect mementoes, I have revived 
my recollection to dictate to my stenographer the matter which 
these pages contain, in a somewhat crude form and unfinished 
style. In fact, I have not aimed at either finish or effect, not 
having time for it, but have simply made a collection of important 
facts in my own experience that may help the future historian 
of Wall street to preserve for the use, knowledge and edifica- 
tion of posterity some of the most conspicuous features and 
events in the history of the place that is yet destined to be the 
great financial centre of the world. 

If I can only succeed, out of all the poorly-arranged material 
I have gathered, in furnishing the historian of the future with 
a few facts for a portion of one of his chapters, I shall have 
some claim upon the gratitude of posterity. 

In my description of Drew, Vanderbilt, Gould, Travers, 



XXV111 DEDICATION TO VETERANS. 

Keene, Conkling and others, I have followed the advice which 
Oliver Cromwell gave his portrait painter : ' ' Paint me as I am, ' ' 
he said. ' ' If you leave out a scar or a wrinkle, I shall not pay 
you a farthing.'* I have given my opinion of men and things 
also without any superstitious regard for the proverbs mortuis 
nil nisi bonum. 

I have also endeavored to refrain from setting down aught in 
malice. Many of those referred to are now dead. 

When any of those gentlemen of whom I have had occasion 
to speak, who still survive, shall write a book, they can indulge 
in the same privilege with my name that I have done with 
theirs, whether I am living or dead at the time. 

I shall ask no indulgence for myself that I don't accord to 
others. 

I have expressed my opinions freely from a Wall street point 
of view, from the standpoint of the much-abused operator and 
broker, and ' ' bloated bondholder. ' ' 

I have endeavored to enlighten the public on the true status 
of Wall street, as the very back-bone of the country's progress 
and prosperity, instead of misrepresenting it as a den of gam- 
blers, according to the ignorant and somewhat popular prejudice 
of the majority who have attempted to write or speak on the 
subject. This feeling has been largely fostered by clergymen, 
on hearsay evidence, as well as by the practices of professional 
swindlers, who have been smuggled into Wall street from time 
to time, but who have no legitimate connection therewith any 
more than they have with the church, which repudiates them 
as soon as it discovers them. 

In fact, the great aim of the book is to place Wall street in 
its true light before the eyes of the world, and help to efface 
the many wrong impressions the community have received 
regarding the method of doing business in the great financial 
mart to which the settlement of accounts in all our industry, 
trade and commerce naturally converges. 



DEDICATION TO VETERANS. XXIX 

I have endeavored to correct the utterly erroneous impression 
that prevails outside Wall street, in regard to the nature of 
speculation, showing that it is virtually a great productive force 
in our political and social economy, and that without it railroad 
enterprise and other branches of industrial development which 
have so largely increased the wealth of the nation, would have 
made but slow progress. 

To preserve and inculcate these ideas by putting them in 
what I hope may be a permanent form, is another object of 
publishing this volume. I know you can sympathize with me 
in this effort to set public opinion right, as many of you have 
long been making strenuous endeavors after success in the 
same direction. 

To put the whole matter, then, into one short and comprehen- 
sive clause, my cardinal object in this book is to give the 
general public a clearer insight of the reputed mystery and 
true inwardness of Wall street affairs. 

In my relation of certain reminiscences of Wall street, and 
in discussing the checkered career of certain brokers, operators 
and politicians, I have endeavored to be guided by a historic 
aphorism of Lord Macaulay : 

"No past event has any intrinsic importance," says the 
great essayist, litterateur, historian and statesman. " The 
knowledge of it is valuable," he adds, " only as it leads us to 
form just calculations with respect to the future." 

In the samples of my experience which I have given in this 
book I have aimed, to some extent, at this rendition of the 
noble purposes of history and biography in their philosophic 
and scientific application of teaching by example. If I have 
fallen far short of this high ideal of the British Essayist, as I 
humbly feel that I have, I must throw myself on the kind in- 
dulgence of the readers, and ask them to take the will for the 
deed. For the presentation of the facts themselves I crave no 
indulgence. They are gems worthy of preservation in the light 



XXX DEDICATION TO VETERANS. 

of the above definition. I only submit that the setting might 
be much better. 

My chapters on politics may be considered foreign to the 
main issue, but as many of the events therein described were 
intimately connected with my business career, I think they are 
not much of a digression. 

Henry Ci^ws, 



INTRODUCTORY. 



MY PART IN MARKETING THE UNITED STATES CIVIL 
WAR LOANS. 

By Henry Clews^ LL.D. 

TO a very large majority of Americans now living the 
great Civil War — waged from 1861 to 1865 — between 
the North and the South is only known as a matter of history. 
But it was the greatest war the world ever witnessed, involv- 
ing the loss of nearly a million of men, and I have a vivid 
recollection of it, for I was an actor in it, from its beginning 
to its end, to the extent of providing some of the sinews of 
war for the United States Government, without which it could 
not have defeated the armies of secession, and preserved the 
Union. 

From the time that Abraham Lincoln was elected to the 
Presidency of the United States, in November, 1860, the 
South began to prepare for secession from the North, peace- 
ably if the North consented, but by war if it resisted. It 
was bent on this course because it foresaw in a Eepublican 
administration at Washington its practical loss of control of 
Congress and the spoils of office — in fact, of the Government 
itself — that it had so long enjoyed under Democratic ad- 
ministrations. James Buchanan's term as President having 
expired on March 4, 1861, Abraham Lincoln was then in- 
augurated as his successor. It angered the South to see a 
Republican succeed a Democrat in the White House, and it 
precipitated the tremendous conflict that followed, by seiz- 
ing Fort Moultrie, in Charleston Harbor, and firing on Fort 
Sumter. Fort Moultrie's guns awoke the North to action, 
and made it a determined unit in defense of the flag that had 



XXX11 MY PART IN MARKETING CIVIL WAR LOANS. 

been fired upon, and its cry was, " The Union must and shall 
be preserved ! " 

As this was the most eventful and critical period in our 
national history since 1776, and so many know it only by 
what they have read of it, I will give a general idea of its 
salient features bearing upon the Government finances and 
the war loans. 

When, after the bombardment of Fort Sumter by Fort 
Moultrie, on April 14, 1861, Major Kobert Anderson, the 
Union commander, accepted, under the stern necessities of 
the situation, General Beauregard's terms of evacuation, the 
die was cast. 

The North picked up the gauntlet of war with patriotic en- 
thusiasm, and the great conflict had begun. But when our 
troops marched out of that dismantled stronghold of the 
Union, with drums beating and colors flying, it is safe to say 
that few or none, either in the North or the South, foresaw 
the long and mighty struggle that would, for four eventful 
years, follow the bombardment of Fort Sumter, during which 
gold would become demonetized before the end of the year. 
It did so on December 30, 1861, and in the darkest days of 
the conflict commanded a premium as high as one hundred 
and eighty-five per cent, over United States legal tender 
notes, making these worth only 54 1/20 cents in gold, while 
United States bonds were selling for about 60 cents on the 
dollar in gold. 

When the New York Clearing House agreed, on the date 
named, to suspend specie payments, the example was at once 
followed by all the banks in the country, and gold immediately 
began to command a small premium. None supposed then 
that the suspension would continue for eighteen years. 

In England, during the long suspension from 1797 to 1821 
— through the Napoleonic wars — the premium on gold never 
rose above forty-one per cent., and that was in 1814, the year 
before the end of hostilities. This was owing to the policy of 
William Pitt and his successors in the management of the 
British finances. They raised all the money needed for war 



MY PART IN MARKETING CIVIL WAR LOANS. XXX111 

purposes by taxation and loans, thus restricting the paper 
money issues, so as to prevent currency inflation, whereas we 
pursued the opposite course. 

When Fort Sumter was fired upon, my firm — Livermore, 
Clews & Co. — was already prominent in Wall Street, and I 
immediately began to devise ways and means to help the Gov- 
ernment to raise the money that I saw would be necessary to 
prosecute the war for the Union which this bombardment 
made inevitable. Fort Moultrie's guns had united the North 
in a call to arms, and men by tens of thousands left the farm, 
the loom, the office, and the store, from Maine to Indiana, to 
join the Union army. 

Money, therefore, was needed by the United States Gov- 
ernment, and very large amounts of it, to equip troops and 
purchase munitions of war. 

As James Buchanan was then President, and, like a long 
line of his predecessors, a Democrat, he had several South- 
erners in his Cabinet. These promptly resigned their places 
and went South, including the Secretary of the Treasury, 
Howell Cobb, who left with surprising suddenness, and the 
office was filled for a brief period by General John A. Dix, 
as acting Secretary. 

But before leaving, Howell Cobb had offered and sold to 
Wall Street bankers $20,000,000 of United States ^ve per 
cent bonds at 105, authorized, of course, by an old law. 
Owing, however, to the heavy decline in securities, and general 
depression following the outbreak of the war, only about one- 
quarter of these bonds were taken and paid for by those who 
had subscribed for them ; and nothing was done by the Gov- 
ernment to enforce the completion of the purchase by those 
who had defaulted under the severe stress of the times. 

Their default was a serious matter for the Government at 
that time, as it left the funds in the Treasury in a very de- 
pleted condition, and interest payments on the public debt 
were about to fall due, which it had no money in its vaults to 
provide for. At this crisis John J. Cisco, the United States 
Sub-treasurer in ISTew York, was instructed, from Wash- 



XXXIV MY PART IN MARKETING CIVIL WAR LOANS. 

ington, to call a meeting of the principal Wall Street bank- 
ers at the Sub-treasury, and after stating the situation to 
them, to ask for an emergency loan on one-year United States 
notes, and let them fix the rate of interest themselves to cor- 
respond with the state of the money market. 

Money was then loaning at about twelve per cent, per an- 
num in Wall Street. So when the bankers who responded to 
Mr. Cisco's call, myself among the number, assembled at the 
Sub-treasury, they, after full discussion, agreed to take the 
amount of notes offered, and at this rate of interest. It was a 
very high rate for the Government to pay, too high under 
ordinary circumstances, but the emergency justified it; and 
Mr. Cisco approved of it, in view of the market rate and 
the notes running for one year only. My firm took a con- 
siderable amount of them and induced others to do so also, 
and we did so, presumably like the rest of the buyers, not 
merely because the rate agreed upon was so high, but because 
we felt it a duty to help the Government; and at all times 
thereafter during that critical period we worked no less 
diligently to uphold the public credit. 

The Government recognized that a default in its interest 
payments would have been disastrous to the public credit, 
and a stumbling block in the way of raising money to prosecute 
the war, besides causing general depression of business. It 
therefore had to be prevented at all hazards. 

Had these notes not been taken, the Treasury would un- 
doubtedly have been left without the means of paying this in- 
terest when due. Consequently, it gratified me to feel that I 
had been instrumental in inducing others to subscribe for a 
part of this urgently needed loan. 

Soon afterwards Mr. Salmon P. Chase was appointed Sec- 
retary of the Treasury by President Lincoln. 

Not long afterwards Secretary Chase cam~ to the Sub- 
treasury and invited bids for $20,000,000 of six per cent. 
United States bonds maturing in 1884. These were author- 
ized by an old law. He accepted all bids at 94 and over, but 
rejected all under 94, the result of which was that consider- 



MY PART IN MARKETING CIVIL WAR LOANS. XXXV 

ably more than a third of the 1884's remained unsold. This 
was to be regretted, because the Treasury was in great need 
of money. I therefore quickly bestirred myself to form a 
combination to purchase the unsold bonds of 1884 at 94, my 
firm being willing to take a liberal share of them, and I suc- 
ceeded in getting subscriptions from banks and capitalists 
who had not bought any of those sold, for the unsold amount, 
subject to my own discretion as to the advisability of taking 
the bonds, after going to Washington and conferring with 
Secretary Chase. 

So I immediately went there by night train and saw the 
Secretary early in the morning at the Treasury, and told him 
I had come on behalf of the combination I had formed, to 
make him a direct offer at his own price — 94 — for the unsold 
1884 bonds. He was evidently pleased and surprised by the 
apparent improvement in the demand for them. He said, 
however, with a fine sense of probity, and consideration for 
the rights of others, that while he was glad I had come to 
Washington, and made the proposition to take the balance, he 
did not think it would be fair to those who had bid and whose 
bids were thrown out, to sell the rest of the issue without first 
notifying them of the new offer, and giving them the option 
of taking what they wanted at the price I offered — 94. 

He asked me to call again the next morning, after he had 
given the matter further consideration, and I did so. But 
meanwhile I had talked with many Southern politicians and 
officeholders, Peter G. Washington, one of the Virginia Wash- 
ington, among them, and seen so much of the extensive war 
preparations which were being made in and about Wash- 
ington, that I came to the conclusion that a long and very 
bitter war lay before us, notwithstanding that Mr. Chase had 
the day previously assured me that it would all blow over, 
with peace restored, within sixty days, a prediction that was 
echoed by Secretary of State Seward a little later. I 
was particularly impressed by what Mr. Washington, himself 
a prominent Government official, had told me of Southern 
sentiment and Southern determination to fight till all was 



XXXVI MY PART IN MARKETING CIVIL WAR LOANS. 

lost or gained, and by his and other Southerners' absolute but 
mistaken confidence that the South would establish its own 
Confederacy, however long a war it might take to do it. 
The South in seceding from the Union expected to be able 
to establish a slave oligarchy, for in Lincoln's election it 
foresaw the doom of slavery, as both he and the Republican 
party were pledged to work for its abolition. Yancey and 
the other leading Southern " fire eaters " were responsible 
for this false view. 

When I made my second call upon Mr. Chase, I said: 
" Since I saw you yesterday, Mr. Secretary, I have heard so 
much in conversation with Southern politicians and office- 
holders at the hotels, and seen and heard so much of the ex- 
tensive war preparations on both sides, that I am convinced 
the war will be a long one, and I fear we shall see much lower 
prices for Government bonds and securities of all kinds. 
Feeling as I do, therefore, in justice to those I represent and 
who have given me full power to use my own discretion in the 
matter, I must withdraw the offer I made you yesterday. 
Had you accepted my offer at the time, of course I would 
have considered the transaction closed, and taken the bonds 
without question, but as it is, you will admit I am under no 
obligation, and free to retire." 

" Oh, certainly," said Mr. Chase, " but I think you are 
making a mistake, for the war will be over in sixty days and 
these bonds will go to par ! " 

But my sober second thought and foresight, based upon 
what I had seen and heard, and the information I had gleaned 
in Washington, served me well, and my associates in the com- 
bination had reason to thank me for my sagacious action, as 
the bonds soon afterwards declined to 84; and the Union 
disaster at the battle of Bull Run, fought at Manassas on 
July 21, 1861, aroused the North to a realization of the 
gravity and vastness of the conflict far more than any of the 
warfare that had preceded it had done; at the same time it 
made it more determined than before to prosecute the war till 
the South was conquered into submission to the Union forces. 



MY PART IN MARKETING CIVIL WAR LOANS. XXXV11 

Mr. Chase's second act, in replenishing the Treasury's 
funds, was to offer for subscription six per cent. United States 
notes, receivable for all payments, including customs duties, 
authority to issue which already existed. He found dif- 
ficulties in the way, however, and, after conferring with the 
Sub-treasurer, Mr. John J. Cisco, who recommended the ap- 
pointment of three Wall Street banking houses to act as Gov- 
ernment agents for their sale, on commission, namely, Morris 
Ketchum & Co., Read, Drexel & Van Vleck, and Livermore, 
Clews & Co., he appointed them. These were the first and 
sole Government agents for the sale of its securities that had 
been thus far selected, and they all appreciated the compli- 
ment, and did their work well, for they promptly sold all the 
notes, of this issue, the Secretary had offered. 

Mr. Chase throughout made strenuous efforts to supply 
the Government with the means for carrying on the war, and 
he was loyally aided by the banking interests of Kew York, a 
fact which he recognized and acknowledged to me and others 
in appreciative terms. 

On a subsequent memorable occasion, in the summer of 
1861, Secretary Chase appeared at the Sub-treasury after 
Sub-treasurer John J. Cisco had called, at his request, a num- 
ber of leading bankers and capitalists to meet and confer with 
him. When we assembled there he said to us, in his stately 
and impressive manner, " Gentlemen, the Government needs 
and must have fifty millions of dollars, and it wants it at once 
to meet war expenses. For this I am prepared to issue that 
amount of Treasury notes of the two hundred and fifty mil- 
lion issue just authorized by Congress — by the act of July 
17, 1861 — bearing interest at 7 3/10 per cent. I am no 
financier, so I Cannot tell you how to raise the money, but 
you distinguished leaders in the world of finance well know 
what means to adopt to get it. So I leave it in your hands 
entirely. All I need say further is to repeat that the Gov- 
ernment must have fifty millions of dollars, and I leave it 
to you to find the way to procure it." 

Then Mr. Chase sat down, and all of us who were present 



XXXV111 MY PART IN MARKETING CIVIL WAR LOANS. 

compared notes with each other in conversation about the 
room; that is, we talked the matter over for nearly twenty 
minutes. The result of the conference was then announced 
by our spokesman, Moses Taylor, who said, addressing Mr. 
Chase : 

" Mr. Secretary, we have decided to subscribe for the fifty 
millions of United States Government securities that you 
offer, and to place that amount at your disposal immediately ! 
So you can begin to draw against it to-morrow ! " 

A general clapping of hands followed this prompt announce- 
ment, and Mr. Chase responded by saying : 

" Gentlemen, I thank you on behalf of the Government for 
your public spirit in helping it so generously and so promptly 
in this emergency." 

The whole scene was of rare and stirring interest, and 
momentous consequences hinged upon its result. As a drama 
drawn from real life it would have been effective if represented 
on the stage, with the large and portly form and massive head 
of Secretary Chase as its leading feature. 

This was the first lot, or installment, of the $250,000,000 
issue of 7-30 Treasury notes put on the market. 

Of these, the Secretary had the privilege of issuing $50,- 
000,000, payable in coin at the Sub-treasuries in New York, 
Boston, and Philadelphia, without interest, to be used as cur- 
rency. 

After disposing of the first 50,000,000 of 7-30 notes, as 
I have described, Secretary Chase communicated with the 
banks concerning the sale of the remainder, with the view 
chiefly of saving the payment of commission to the agents. 
But he was unable in that way to make sales on satisfactory 
terms to them. So he added to the three Government agents 
originally appointed for the sale of its securities, Eisk & 
Hatch, and Vermilye & Co., of New York, and Jay Cooke & 
Co., of Philadelphia, and told them the " 7-30 " notes would 
be delivered to them as fast as called for at the New York Sub- 
treasury. 

Thereupon the New York agents held a meeting, at which 



MY PART IN MARKETING CIVIL WAR LOANS. XXXIX 

it was agreed that Jay Cooke, of Philadelphia, should be at 
the head of the agency system and take charge of the advertis- 
ing of the 7-30 loan, or, in other words, that Jay Cooke 
should act as Chairman of the agency system. The agreement 
also specified the commission rates and other details for the 
purpose of avoiding cutting, or clashing, between the agents. 
To this organization and agreement Mr. Chase assented ; and 
all the agents made strenuous efforts to make sales from the 
word go. 

Jay Cooke & Co. had no office in New York at that time, nor 
did they establish one till after the end of the war. This 
really led to their designation as the head of the agency sys- 
tem, as the selection of a New York firm would have created 
jealousy among the New York firms. 

After all the 7-3 0s authorized to be issued were sold, came 
the 5-20 loans, which were sold through the same Govern- 
ment agency system, and the 5-20s were as successful as the 
7-30s had been. 

Mr. Munson B. Field, Assistant Secretary of the Treasury 
under Salmon P. Chase, had an examination made of the 
books at Washington, at my request, to see which individual 
firm of the Government agents sold the most United States 
7-3 0s and 5-2 0s, and he reported that Liver more, Clews & 
Co. had the highest record. But I am willing that the 
credit should be shared equally by the four United States 
war loan banking firms, viz.: Jay Cooke & Co.; Livermore, 
Clews & Co. ; Vermilye & Co., and Pisk & Hatch, as all did 
equally good and earnest work in financing the Government 
during the Civil War. Certainly the four firms are entitled 
to equal credit, and no one to a greater extent than the others. 
There was sufficient glory achieved by the magnificently pa- 
triotic work done by these four firms to admit of dividing the 
honors, so that I do not hesitate to say that they did immense- 
ly valuable service to the Nation, and made for themselves a 
proud National record, which should be always greatly ap- 
preciated by the American people, as it was at the time by the 
Government authorities in Washington. The Government 



Xl MY PART IN MARKETING CIVIL WAR LOANS. 

was thus enabled to clothe and feed a million of soldiers in 
arms on the battlefield, fighting for the salvation of the Na- 
tion, and these finally brought the war to a victorious end, 
thus perpetuating the best form of government known to 
man. 

I may here mention that Secretary Chase said: 

"If it had not been for Jay Cooke and Henry Clews, I 
should never have been able to sell enough of the 7-30 notes 
and 5-20 bonds to carry on the war." 

This remark of his was generally published at the time 
in the newspapers. 

The Government had sold through its agents $150,000,000 
of the 7-30 notes before the suspension of specie payments, an 
event that was hastened by the Secretary's withdrawal from 
the banks into the Sub-treasuries of most of the proceeds of 
the sales, his call for payment from the agents to the Treasury 
being in three installments: on August 19th, October 1st, and 
November 2d. Moreover, the hoarding and exportation of 
gold were largely stimulated by the anticipation of specie 
suspension, and, after it occurred, gold suddenly disappeared 
from circulation. 

This obviously involved a corresponding contraction of 
the circulating medium, and Mr. Chase, to neutralize it, and 
supply the place of the demonetized coin, issued the $50,- 
000,000 of non-interest-bearing notes, which were called 
United States Demand Notes. He did this also to obviate 
the necessity of the State Banks issuing more of their own 
notes, as well as to raise money to meet the rapidly increasing 
demands of the Treasury. 

Congress, seeing that this contraction tended to produce 
stringency in the money market, and handicapped the Govern- 
ment's agents in the sale of its securities, had, on August 5, 
1861, suspended the act of August 6, 1846, " providing for 
the better organization of the Treasury, and for the collec- 
tion, safe-keeping, and disbursement of the public revenue." 
It did this so as to permit the Secretary of the Treasury to 
deposit any of the money obtained on authorized loans in such 



MY PART IN MARKETING CIVIL WAR LOANS. xll 

solvent specie-paying banks as lie might select, and, in addi- 
tion, it expressed this in a resolution. The resolution was 
promptly acted upon by Secretary Chase, and this, and a later 
law, governed the policy of the Treasury ever afterwards. 
Monetary stringency was thus avoided by the Treasury keep- 
ing as much of its money in the banks as it could, and so lock- 
ing up as little as possible in the Treasury and Sub-treasuries. 
The evil effects of the Sub-treasuries system in locking money 
out of circulation was thus practically acknowledged and 
guarded against. 

When the sale of the 7-30s had been completed by the Gov- 
ernment agents, there was great pressure brought to bear by 
the banks throughout the country, who were backed by many 
influential newspapers, in favor of giving the sale of the 
5-20s to the banks instead of to the Government agents. The 
pressure upon Secretary Chase became so great that he con- 
cluded to try the experiment, and authorized all the banks 
throughout the country to sell the 5-20s. After giving them 
every opportunity to supersede the agency system, as pre- 
viously adopted with the six per cent, and the 7-30 Treasury 
notes, the Secretary was finally compelled to abandon the 
banks and go back again to the agents, who took hold with 
vigor and made the sale of the 5-2 0s as brilliant a success as 
they had previously made that of the 7-3 0s. We were friend- 
less in Europe, but we overcame this by patriotism and 
energy at home. 

After a time, some of the banks, and there were only State 
Banks then, threw out the Demand Notes, and so it became 
necessary to enforce their circulation. To accomplish this, 
Secretary Chase asked Congress to make them a legal ten- 
der for the payment of all debts, public and private, except- 
ing customs duties, and interest on the public debt, payable 
in coin. 

Congress, therefore, on February 25, 1862, remedied the 
difficulty by passing the Legal Tender Act, making these and 
all the United States notes lawful money. In the same act it 
authorized the issue of $150,000,000 of new non-interest- 



Xlii MY PART IN MARKETING CIVIL WAR LOANS. 

bearing legal tender notes. The provision for the payment 
in coin of customs duties and interest on the bonded debt was 
obviously as necessary as it was wise, as customs duties fur- 
nished the means for paying the interest in specie; and the 
fact of its being payable in gold created a demand for our 
bonds in other countries, as well as at home, which would not 
have existed on paper money interest. 

Before long, the whole of the authorized $250,000,000 of 
7-30 notes had been sold to the public through the Govern- 
ment agents ; and later, from time to time, Congress author- 
ized large additional amounts of these till finally they 
reached their maximum, in August, 1865, when $830,000,- 
000 of them were outstanding. 

At the same date, also, the Government bond issues, which 
had kept pace with the 7-30 note issues, and, simultaneously 
reached their maximum, showed immense totals. There were 
then outstanding $514,880,500 of 5-20 bonds, and $172,- 
770,100 of 10-40 bonds. Among our own people patriotism 
and profit combined to make these great United States loans 
doubly attractive, and the Government agents used their best 
efforts to stimulate the demand for them both at home and 
abroad. Livermore, Clews & Co., in particular, sold large 
amounts of these in England and other foreign countries, 
where they ultimately proved extremely profitable invest- 
ments. To meet the demands of the war, we — the Govern- 
ment agents — were as anxious as the Secretary of the 
Treasury himself, and never were men more successful in ac- 
complishing their object and doing good work than we were. 
There was patriotism worthy of Patrick Henry, as well as 
profit, in this, and Wall Street can lay the flattering unction 
to its soul that it rendered, through the Government agents, 
the best of good service to the Government in this time of 
peril to the Union. 

As General Grant said long afterwards to me, we were not 
fighting for the Union as soldiers in the field, but we served 
it equally well by helping it in its struggle for money to 
prosecute the war ; and I felt proud of the active part I took 



MY PART IN MARKETING CIVIL WAR LOANS. xliii 

in thus helping to preserve the Union as one of its army in 
civil life. 

The campaign in Virginia having proved prolific of dis- 
aster to the Union army, Congress, on July 11, 1862, author- 
ized the issue of a hundred and fifty millions more of non- 
interest-bearing United States legal tender notes, and on 
January 17, 1863, another hundred millions to which it 
added $50,000,000 on March 3d, in the same year, making 
$450,000,000 of legal tender notes, or greenbacks, fifty of 
which were to be held as a Treasury reserve, for the re- 
demption of temporary loan certificates. 

This was the maximum issue of non-interest-bearing legal 
tender notes at any time, and by the act of January 28, 
1865 Congress restricted the total to $400,000,000, and there 
it remained till Hugh McCulloch became Secretary of the 
Treasury, early in 1865. 

Secretary Chase had meanwhile become Chief Justice of 
the United States Supreme Court, and Thomas Fessenden, 
who succeeded him as Secretary, had resigned. Mr. Mc- 
Culloch began to contract the legal tender notes, and had 
withdrawn $44,000,000 before Congress interfered to pro- 
hibit any further contraction. It did this in response to a 
general protest against any further curtailment of the green- 
backs in circulation. 

From that time until the panic of 1873 their amount re- 
mained at $356,000,000. In the interval Mr. Boutwell had 
succeeded Mr. McCulloch, and Mr. Richardson had succeeded 
Mr. Boutwell as Secretary. Mr. Richardson, under di- 
minished customs and revenue receipts, and the stress of the 
panic, restored to circulation $26,000,000 of the $44,000,- 
000 of legal tender notes that had been withdrawn by Mr. 
McCulloch, whereupon Congress, on June 22, 1874, provided 
that the greenbacks in circulation should remain fixed at the 
then existing total of $382,000,000. 

The same law which thus legalized the reissue of the $26,- 
000,000 of legal tender notes by Secretary Boutwell 
abolished the National Bank reserve, previously required to 



Xliv MY PART IN MARKETING CIVIL WAR LOANS. 

be kept on bank-note circulation, and for this substituted 
the provision that the banks were to deposit five per cent, in 
legal tender notes of the amount of their own note issues 
with the United States Treasurer at Washington for the re- 
demption of their notes. 

This law is still in force, and the establishment of the Ee- 
demption Bureau at Washington has resulted, ever since, in 
daily receipts by it of mutilated bank notes to be replaced by 
new notes, in addition to the ebb and flow caused by banks 
increasing or reducing their circulation. The five per cent, in 
legal tender deposited is counted by them as part of their legal 
reserve. But the necessity of sending the notes to Wash- 
ington, and of receiving them therefrom, involves trouble 
and loss of time to the banks, and also prevents the banks 
from contracting their circulation when the demand for it is 
light and increasing it when heavy, as freely and promptly as 
they would if every Sub-treasury was made a redemption 
point for National Banks. Congress ought therefore to au- 
thorize the equipment of the Sub-treasuries with redemption 
bureaus for the banks in their respective districts, in order to 
facilitate this ebb and flow of bank-note issues, and so in- 
crease the much needed elasticity of the currency. 

In addition to United States legal tender notes, large 
amounts of interest-bearing legal tender notes were issued 
during the war. On September 1, 1865, when the cur- 
rency, like the whole National debt, reached its greatest 
amount of inflation, the noninterest-bearing legal tender 
notes and fractional currency stood at $459,505,311, the 
three years six per cent, compound interest legal tender notes 
at more than $217,000,000, and the one and two years five 
per cent, legal tender notes at nearly $34,000,000, the whole 
aggregating $685,236,269 issued by the Treasury. 

There were also outstanding $107,000,000 of temporary 
loan certificates. These, being payable after ten days' 
notice, were treated as greenbacks by the banks, and counted 
as part of their lawful money reserve, while the remainder 
circulated as currency, and so practically increased the 



MY PART IN MARKETING CIVIL WAR LOANS. xlv 

volume of paper money. At the same time the new National 
Bank law had put in circulation $170,000,000 of National 
Bank notes ; and more than $70,000,000 of State Bank notes 
were still circulating. The last named were, however, soon 
taxed out of existence by Congress. The grand total of the 
issues enumerated was ten hundred and sixty-seven millions 
of paper money in circulation. Nor was this all, for there 
were then outstanding $85,000,000 of one-year certificates of 
indebtedness; and the $830,000,000 of 7-30 notes, called 
7-30s, outstanding were extensively used as money, and so 
tended to increase the inflation of the currency and prices. 

It will be seen therefore that the inflation of the currency 
was really much larger than it appeared to be by the Public 
Debt statements at that time. But so rapid was the contrac- 
tion during the eight years following, through the maturity 
and cancellation of interest-bearing notes and certificates, 
that it is safe to say we had from sixty to seventy-five per 
cent, less paper, used as money, in circulation when the 
panic of 1873 commenced than we had in September, 1865, 
and to this enormous contraction of our medium of ex- 
change that disastrous panic, the worst this country ever had, 
was largely due. It was, I repeat, the worst in its effects that 
this country ever experienced, not excepting the panics of 
1837 and 1857, and was aggravated by the Franco-German 
War, that practically shut American securities out of the 
European markets, which had previously taken them freely. 
This was a severe blow to the American bankers who had 
undertaken to finance the railways then in process of con- 
struction in different parts of the country, and who had 
relied upon finding both home and foreign markets for the 
sale of the bonds issued against the completed mileage of 
these railways, and it led to much embarrassment and a num- 
ber of failures. The depression following this panic of 1873 
— in which Jay Cooke & Co. failed owing to their having 
undertaken to finance the Northern Pacific — was prolonged, 
and prosperity did not really return to us as a Nation till 
after the resumption of specie payments in 1879. Mean- 



xlvi MY PART IN MARKETING CIVIL WAR LOANS. 

while, nearly all the uncompleted railways in the country had 
been reorganized through foreclosures that wiped out hun- 
dreds of millions. 

Our National debt, which had increased from $64,000,000 
on June 30, 1860, and $88,409,387 on June 30, 1861, to 
$2,845,907,626 on September 1, 1865, had then been very 
largely reduced, for it was only $2,140,695,365 on September 
1, 1873. The debt and the currency had gone up and down 
together under the influence of a common cause. Not till 
specie payments were resumed by the Government and the 
banks did gold cease to command a premium. With this the 
Gold Room became a thing of the past. 

The great activity and the enormous sales of the Govern- 
ment agents may be inferred from the maximum amounts I 
have quoted, of the 7-30 notes, and the 5-20 and 10-40 bonds 
outstanding five months after Lee surrendered to Grant at 
Appomattox on April 9, 1865. 

The total debt on which interest was payable in coin then 
amounted to $1,116,658,100, while that bearing interest in 
lawful money was $1,874,478,100, the first calling for $65,- 
001,570 in gold annually, and the other for $72,527,646 of 
greenback currency. 

That great event — Lee's surrender to Grant — that ended 
the war, was the fitting prelude to General Grant's election to 
the Presidency. It made it certain that no other Republican 
candidate for the office of President of the United States 
would have any chance of success at the next general election, 
and, of course, no Democratic candidate could be elected. 
Grant became our great National hero, and the country glori- 
fied him for his splendid war record. 

But soon after the memorable historical scene at Ap- 
pomattox, while the country was rejoicing over the advent of 
peace, with the Union restored, there came that terrible 
tragedy at Ford's Theater in Washington, when President 
Lincoln, on April 14, 1865, was assassinated by John Wilkes 
Booth, and on the following day Vice President Andrew 
Johnson was sworn in as President. 



MY PART IN MARKETING CIVIL WAR LOANS. xlvii 

Then, indeed, the Nation was plunged into mourning, and 
mourning emblems from ocean to ocean testified to the 
National grief. 

I will not dwell on the stormy career of Andrew Johnson 
as President, and the impeachment proceedings against him, 
that for a long time made both branches of Congress seething 
cauldrons of excitement. But it was a happy relief to the 
country when his term expired and General Grant succeeded 
to the Presidency on March 4, 1869, with Schuyler Colfax 
as Vice President. The Democratic candidates who had run 
against General Grant in the campaign in which he was 
elected in November, 1868, were Horatio Seymour and Gen- 
eral Francis P. Blair, Jr. But the popularity of Grant was 
so overwhelming that his election was a foregone conclusion. 

Till within a short time of its final termination the dura- 
tion of the war was a matter of much uncertainty, and its 
ultimate result had long been the subject of doubt and gloomy 
forebodings by many who failed to see that the superior 
money power and resources of the North were sure to conquer 
and crown the Union with victory in the end. Our currency, 
greatly inflated though it was, remained good throughout the 
trying ordeal, whereas that of the Confederate States be- 
came utterly discredited and worthless, thus repeating the 
history of the French assignats. 

A new era opened in our history with the ending of the 
war, and our currency, which, of course, had previously no 
circulation in the South, began to circulate there. This, of 
itself, was equivalent to extensive contraction. The currency 
of one section had now to supply the currency needs of both 
sections, and for a long time the drain of money from the 
North to the South was felt in the money market. 

The country was somewhat like a sick man accustomed to 
and dependent on stimulants, to withdraw which suddenly 
would have been perilous. Many in Congress recognized this 
danger, for it was a noticeable feature of the debates on the 
subject that not a few of those who had been strongly opposed 
to our excessive issues of paper money during the war, and 



Xlviii MY PART IN MARKETING CIVIL WAR LOANS. 

warned the country against them, were among those who op- 
posed violent contraction as being a remedy worse than the 
disease. The radical contractionists, however, failed to see, 
or refused to acknowledge, that the arguments which would 
have applied to the rising tide of the currency while the war 
continued, and there was danger of indefinite further in- 
flation, did not apply with equal force to the altered condi- 
tion of affairs. 

Although schemes of radical contraction were rejected, 
even the moderate measure of contraction that was adopted 
proved too severe to be endured without much complaining 
from business interests, so hard and painful is the process of 
contraction, whereas that of inflation is always pleasant and 
easy. 

In later years I became very well acquainted with General 
Grant, and toward the end of his first term of the Presi- 
dency, when a good deal of opposition was manifested to his 
renomination by the press, including the New York Evening 
Post, I made strenuous efforts to secure his renomination. 
To that end I organized a public meeting at the Cooper In- 
stitute, and induced William E. Dodge to act as Chairman. 
It was a great popular success, and Grant's renomination 
was unanimously advocated with immense enthusiasm. The 
Evening Post then said that after such an overwhelming 
demonstration it was evident that public sentiment was on 
the side of Grant, and that it was useless to oppose his re- 
nomination. He was accordingly renominated by the Re- 
publican Party and triumphantly reelected. His second 
term as President began on March 4, 1873, and he retired 
from the Presidency four years later. 

General Grant was well aware of the part I took at this 
meeting, which, many said, turned the scale in favor of his 
renomination when it was doubtful and trembling in the 
balance, and he also knew of my services in connection with 
the Government war loans, and in organizing various public 
meetings to celebrate Union victories and stimulate recruiting 
for the army. He said that I deserved some public recogni- 



MY PART IN MARKETING CIVIL WAR LOANS. xlix 

tion of my public services in supplying the sinews of war, and 
asked me how I would like to be Secretary of the Treasury, 
but I said I preferred Wall Street. Therefore, later on, he 
appointed me Fiscal Agent for the United States Govern- 
ment in all foreign countries, in place of Baring Brothers, of 
London, who had been its fiscal agents up to that time, since 
the Bank of England had acted in that capacity. 

When it became certain that General Grant's death was 
very near, I was anxious to see him once more, and also a 
strong advocate of his burial in the city of ISTew York, 
where his tomb would be a conspicuous monument, to be seen 
by all, instead of burying him almost out of sight in Arling- 
ton Cemetery or at West Point, which places were strongly 
urged. The States of Ohio and Illinois also claimed him, 
as did the city of St. Louis. They all made strenuous ef- 
forts to obtain the family's consent, as well as his, through 
committees sent to Mount McGregor for that purpose. 

So I went to Mount McGregor, where he was, and as 
delicately as possible urged this upon him and his family. 
All of the members of the family assented, and the General, 
being unable to speak, nodded his assent also to what I said. 
Then when he was wheeled out in his chair, on the veranda, 
on his way to take his regular afternoon sun bath on the 
mountain side, accompanied by Dr. Douglas, he wrote on a 
pad that all he demanded was that his wife should be buried 
by his side when her own time came. Knowing them all 
well, I remained there two hours, talking with the General 
and the family, and my visit, when I made its result known, 
led to the selection of New York as the great soldier's burial 
place, on the conditions mentioned by him. Within three 
days after I had seen him, the great General died. I had 
visited him on a Monday afternoon, and he died on the 
following Wednesday. His death threw the Nation into 
mourning. 

Incidentally, I may mention that I started the organiza- 
tion of the famous Committee of Seventy, that brought about 
the overthrow of the corrupt Tweed Ring, that had robbed the 



1 MY PART IN MARKETING CIVIL WAR LOANS. 

city of New York of about a hundred millions of dollars. I 
nominated sixty-five of its members, and for my instrumen- 
tality in forming that Committee of eminent and public- 
spirited citizens I received many congratulations. That 
Committee not only drove the thieves out of office, but caused 
the prosecution of all of them who had not fled the country, 
and ultimately brought back and convicted Tweed, who died 
in prison. Meanwhile, it had reorganized the City Depart- 
ments, and put new men in office, with Andrew H. Green as 
Comptroller. It purified, and, for a time, virtually ruled the 
city, through controlling its government. 

But above everything else in my business life, I regard 
with most satisfaction the work I did in marketing the Civil 
War loans of the Government of this great and glorious coun- 
try of ours — the United States of America — and in other 
ways strengthening the hands of the Government to the best 
of my ability and with all my heart and soul, not only as a 
banker but a patriotic American citizen; and I felt that I 
had my reward when, after the memorable four years' war, 
peace came bringing with it Victory for the Union and a re- 
united country, a victory which gave permanence to the best 
government ever known to man — a government " of the peo- 
ple, for the people, and by the people/' which bids fair to be 
everlasting. 




MILLS BUILDING (OPPOSITE NEW YORK STOCK EXCHANGE), 
NOS. 11-13-15-17 BROAD STREET AND 35 WALL STREET, 
OCCUPIED BY THE BANKING HOUSE OF HENRY CLEWS 
& CO. 



FIFTY IEAES IN WALL STREET 



By HENRY CLEWS, LL.D. 



CHAPTER I. 

MY DEBUT IN WALL STREET. 

MY advent in Wall Street was on the heels of the panic of 
1857. That panic was known as the " Western bliz- 
zard." It was entitled to the name, as its destructive power 
and chilling effects had surpassed all other financial gales 
that had swept over Wall Street. The first serious result 
of its fatal force was the failure of the Ohio Life and Trust 
Company, a concern of gigantic dimensions in those days. 

The Company had an office in Wall Street, and on the 
announcement of the collapse, business became completely 
paralyzed. This failure was immediately followed by the 
suspension of many large firms that had withstood the shock 
of all ordinary collisions and had successfully weathered 
many financial storms. 

The panic was due in part to excessive importations of 
foreign goods, and also to the rapid construction of rail- 
roads, to a large extent on borrowed capital. There were 
other contributing causes. The crops were bad that year, 
and the country was unable to pay for its imports in pro- 
duce, and coin was brought to the exporting point. In 
October, the New York City banks suspended payments, 
and their example was followed throughout the country. 



() MY DEBUT IN WAU, STREET. 

Bank credits had been unduly expanded everywhere, and 
the time had naturally arrived for contraction. It came 
with a bound, and financial disaster spread like a whirl- 
wind, becoming general. 

The Stock Exchange had been a moderately growing con- 
cern for the ten years previous to this calamity, and the 
securities there dealt in had been rapidly accumulating in 
number and appreciating in value. Its members were 
wealthy and conservative, with a strong infusion of Knicker- 
bocker blood, an admixture of the Southern element and a 
sprinkling of Englishmen and other foreigners. 

The effect of the crisis on the majority of Stock Exchange 
properties was ruinous. Prices fell fifty per cent, in a few 
days, and a large proportion of the Board of Brokers were 
obliged to go into involuntary liquidation. There was a 
great shaking up all around. 

Then came the work of rehabilitation and reorganization 
Confidence gradually returned. The Young Kepublic had 
great recuperative powers, and they were thoroughly ex< 
erted in the work of resuming business. Much of the old 
conservative element had fallen in the general upheaval, to 
rise no more. This element was eliminated, and its place 
supplied by better material, and with young blood, and in 
December the banks resumed business. 

This panic and its immediate results created an entire 
revolution in the methods of doing business in Wall Street. 
Prior to this time, the antique element had ruled in things 
financial, speculative and commercial. This crisis sounded 
the death knell of old fogyism in the Ci street." A younger 
race of financiers arose and filled the places of the old con- 
servative leaders. 

The change was a fine exemplification of the survival of 
the fittest, and proved that there was a law of natural selec- 
tion in financial affairs that superseded old conservatism 
and sealed its doom. 

Until that time, the general idea prevailed that those en- 
gaged in financial matters must be people well advanced in 





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UNWORTHY PREJUDICES OF ANCIENT WAU, STREET. 7 

years, even to the verge of infirmity. It is the same idea 
that has been handed down, as if by divine right, from old 
world prejudices, especially in the learned professions. 
No doctor was considered a safe prescriber unless his hoary 
locks, bald head and wrinkled brow proclaimed that he 
had almost passed the period of exercising human sym- 
pathy. The same rule of judgment was applied to the 
lawyer and the clergyman. 

These unworthy prejudices were fostered by the character 
of the Government of the old country, and nurtured by the 
surroundings of the venerable monarchies of Europe, where 
they exist largely even to the present day. So tenacious of 
life are these old-fashioned ideas, that many of them were 
found in full vigor, dominating Wall Street affairs up to 
the crash of 1857, fostering the antique element and choking 
off salutary enterprise. 

Hence the process of decay of these archaic notions and 
our gradual development. 

This struggle for new life in Wall Street was not success- 
fully developed without a serious effort to attain it. The 
old potentates of the street fought hard to prolong their 
obstructive power, and their tenacious vitality was hard to 
smother, reminding one of the nine lives attributed to the 
feline species. The efforts of the young and enterprising 
men to gain an enxrance to ihe StocK Exchange were re 
garded by the older members as an impertinent intrusion on 
the natural rights of the senior members. It was next to 
impossible for a young man, without powerful and wealthy 
patrons, to obtain membership in the New York Stock Ex- 
change at the time of which I speak. 

The old fellows were united together in a mutual admira- 
tion league, and fought the young men tooth and nail, 
contesting every inch of ground when a young man sought 
entrance to their sacred circle. 

The idea then struck me that there was a chance for young 
men to come to the front in Wall Street. I was then en- 
gaged in the dry goods importing trade, in which I received 



S MY DEBUT IN WAIX STREET. 

3iy early training. I bad been kept out of the Exchange for 
iseveral years by the methods to which I have alluded. My 
fate was similar to that of many others. It was only by an 
enterprising effort, and by changing the base of my opera- 
tions, that I finally succeeded. 

The commissions charged at that time were an eighth of 
one per cent, for buying and selling, respectively. 

After numerous efforts to gain admission to the Exchange, 
without success, I finally made up my mind to force it. I at 
once inserted an advertisement in the newspapers, and pro- 
posed to buy and sell stocks at a sixteenth of one per cent, 
each way. This was such a bombshell in the camp of these 
old fogies that they were almost paralyzed. What rendered 
it more distasteful to them still was the fact that, while they 
lost customers, I steadily gained them. The result was that 
they felt compelled to admit me to their ranks, so that I 
could be kept amenable to their rules and do business only 
in their own conventional fashion. My membership cost me? 
in all, initiation fee and other trifling expenses in connec" 
tion therewith, $500. This presents a striking contrast to 
the recent price of a seat, $35,000, but though this differ- 
ence seems very large, yet the changes in every other re- 
spect connected with Wall Street affairs have been in sim- 
ilar proportion. Among some of the old members of that 
day were Jacob Little, John Ward, David Clarkson and 
others whose names may be found in the archives of the 
Stock Exchange. 

As an instance of the way in which membership was then 
appreciated, it may be mentioned that speculators fre- 
quently offered $100 a week, or ten times the cost of mem- 
bership, for the privilege of listening at the keyhole during 
the calls. 

Although the prostration growing out of this panic was 
very great and of long continuance throughout the country, 
general confidence being shaken to its very foundation, yet, 
on the whole, it was a great gain, and marked an era of 
financial and speculative progress. It was the chief cause 




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YOUNG AMERICA'S SPECULATIVE ADVENT. 9 

in drawing out the young element in the business of Wall 
Street, which might have lain dormant for a much longer 
period without this sudden and somewhat rude awakening. 
It not only brought Young America to the front in specula- 
tion, commerce and general business, but it imparted an 
impetus of genuine enterprise to every department of trade 
and industry, from the good effects of which the country 
has never since receded. 

This new element, emanating from the throes of one of the 
greatest business revolutions that any country has ever ex- 
perienced, has continued to grow and thrive with marvellous 
rapidity. It is now getting so large that the Exchange will 
soon require a whole block instead of a basement as at its 
origin for its head- quarters. The Governing Committee of the 
Stock Exchange are now looking forward to arrangements 
for this consummation. How the ancient fathers of my early 
days in Wall Street would have been shocked at the bare 
idea of such amazing progress ! 

It is not the least singular phase of this evolution in Wall 
Street, that the youthful element to which I have referred 
stands alone as compared with the progress achieved by the 
same class of men in any other nation. In America only 
does the youthful element predominate in financial affairs ; 
and results have justified the selection, which perhaps in no 
other nation is possible. Thanks to the freedom of our Ke- 
publican institutions, which, in spite of some individual 
deductions and the occasional obstructions of u crankdom," 
make way for that progress, in the wake of which the other 
nations of the world are emulous to follow. 

The Exchange was at this time situated on William street 
between Beaver street and Exchange Place. That place is 
rich in speculative reminiscences. It was there that Jacob 
Little made and lost his nine fortunes. It was there that 
Anthony Morse, the lightning calculator, operated. He| 
could foot up four columns of figures as easily as the or- 
dinary accountant could run up one. He had been a clerk, 
and having saved seven hundred dollars by close economy? 



10 MY DEBUT IN WAU, STREET. 

began to deal in stocks. His career at that time was more 
marvellous even than that of Keene of a recent date. Morse 
made a fortune of several millions in a year, and became 
bankrupt during the same period, without any available 
assets to speak of. It was all honorably lost, however. 
There was no Ferdinand Ward game connected with it. 

Youthful speculators had not then learned the " crooked " 
methods of the young idea of modern times. It was there 
also that Daniel Drew began to accumulate those millions 
that afterward were subject to such a rude scattering. It 
was there that the celebrated u corners " in Rock Island, 
Prarie du Chien and Harlem were concocted. It was there 
that the wealth was accumulated which built twenty thous- 
and miles of Western railroads, causing many millions of 
acres, that would otherwise have been a wilderness, to blos- 
som like the rose, in spite of Mr. Powderly's opinion that 
no material good can come out of speculation, and thus add- 
ing immense wealth in real estate to the country, besides 
conferring incalculable benefits on trade and commerce, and 
preparing comfortable homes not only for the pioneers and 
surplus population of the Eastern States, but a teeming soil 
that has attracted the down- trodden of every nation to come 
End partake of the blessings of freedom and prosperity. 

One of Jacob Little's speculative ventures has been ren- 
dered historically famous through the rule of limitation of 
sixty days for option contracts. The necessity for this limit 
was brought about by one of his celebrated attempts to 
manipulate the market. He was one of the most prominent 
speculators in Erie in the early days of Drew's transactions 
with that property and its stocks. Mr. Little had been 
selling large blocks of Erie on seller's option, to run from 
six to twelve months. This was in the early history of 
M corners," before the method of managing them scientif- 
ically had been fully developed and while " blind pools " 
were yet in embryo. 

The leading members of the Erie Board formed a pool 
to "corner" Mr. Little, and ran Erie shares up to a consid- 



THE FIRST OF GREAT "CORNERS." H 

erable height. They imagined that he was in blissful 
ignorance of their purpose, and had everything arranged 
for a coup d'etat which was to reach its crisis at two o'clock 
on a certain day, when Little was to be completely over- 
whelmed and hopelessly ruined. An hour prior to the time 
appointed by the clique for his disaster he walked into the 
Erie office, opened a bag filled with convertible bonds, and 
requested an exchange of stock for the same. He had pur- 
chased the bonds in London and had them safely locked up 
for the emergency, which he promptly met on its arrival. 
He got the stock, settled his contracts, broke the " corner," 
and came out triumphantly. 

The option limit of sixty days was afterwards adopted in 
order to prevent similar triumphs in manipulation on the 
"short" side. 

As will be illustrated more fully in subsequent chapters, 
Mr. Little's convertible bond trick was used with signal 
advantage by his speculative successors in Erie, who prac- 
tically demonstrated on several occasions that there were 
millions in it. 

Mr. Little was generous and liberal to a fault with his 
brother speculators who had experienced misfortune. He 
used to say that he could paper his private office with notes 
he had forgiven to the members of the Board. He was also 
remarkable for his great memory. He could easily re- 
member all the operations he made in the course of a day 
without making a note or a mistake. 

Like Drew, he was careless in his attire, wearing a hat 
like that of a farmer, and not a very prosperous one, but he 
had no compeer in his day at calculating ahead in a specu- 
lative venture. 




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JACOB LITTLE. 



CHAPTEK II. 

WALL STREET AS A CIVILIZER. 

Clerical Obliquity of Judgment About Wall Street 
Affairs.— The Slanderous Eloquence of Talmage. — 
Wall Street a Great Distributor, as Exhibited in 
the Clearing House Transactions. — Popular Delu- 
sions inKegard to Speculation.— What Our Revolu- 
tionary Sires Advised About Improving the Indus- 
trial Arts, Showing the Striking Contrast Between 
Their Views and the Way Lord Salisbury Wanted 
to Fix Things for This Country. 

THE dense ignorance displayed by men outside of Wall 
Street, in regard to the business of that great mart, is 
almost incredible. Even the most intelligent men I meet 
in other professions and walks of life have the most utterly 
crude and undefined notions about the methods of doing 
business at the Stock Exchange. Many good and pious 
clergymen are under the impression that Wall Street is a 
name for the sum total of all kinds of infamy, and solemnly 
exhort their devoted flocks not to touch the unclean 
thing. 

Clerical obliquity of judgment is not quite so bad, nor 
popular ignorance so dense in this respect, as it has 
been, but there is a large field for improvement yet. The 
business activity of the country, and the spirit of inter- 
course being so rapidly infused throughout all ranks of the 
community, have demonstrated that this antipathy to Wall 
Street has been simply an unworthy prejudice, in spite of 
the high moral authority from which it has emanated. 

I don't w r ish to throw any aspersion on the noble purposes 
of the clergy. The end they have been seeking has been good, 
but it has not always justified the means employed. These 
good men have unwittingly misrepresented Wall Street, to 
the great detriment of the business interests of the country. 



14 WALL STREET AS A CIVILIZER. 

There is no excuse, however, for a man in this enlightened 
age, who professes to be a Shepherd in Israel and a spiritual 
leader of the people, to remain ignorant of an important 
fact, or to continue to see that fact through a false medium, 
when he has the opportunity of coming into Wall Street and 
seeing for himself. He has no right to set himself up as a 
censor, a public detractor, and a public libeller upon a set 
of men and merchants who are the bone and sinew of the 
commercial and industrial interests and prosperity of the 
country. It is not only a personal wrong but a public 
injury. 

The Kev. T. De Witt Talmage has perhaps done more 
than any other clergyman to make our speculators, invest- 
ors and business men ridiculous in the eyes of the rest of 
the community and in the estimation of John Bull, in whose 
dominion his so-called sermons are extensively read. Tal- 
mage has employed his flashing wit and mountebank 
eloquence to bring financial disgrace on the business 
methods of the whole country by the manner in which he 
has ignorantly vilified Wall Street. 

He can go to the Cremorne Garden, Billy McGlory's, 
Harry Hill's and other places of dubious reputation, and 
make himself acquainted with the real condition of things 
there. 

How far he has penetrated into the green rooms and be- 
hind the scenes in these places it is not my business to know, 
but why should he not treat Wall Street as fairly, where 
everything is open to inspection, as he does these dens of 
vice, where midnight scenes of villainous revelry and reckless 
dissipation reign supreme ? Why does he misrepresent 
Wall Street without knowing anything about it ? He can 
come here and go wherever he wishes without a bodyguard 
of detectives or fear of molestation. Why is he so par- 
ticular about doing justice to the brothel and the gaming 
den, while he airs his ludicrous eloquence to the highest pitch 
to falsify the respectable business methods of Wall Street ? 



BASS CALUMNIES OF TAI,MAGE AND OTHERS. 15 

I recollect the time that men in the higher walks of life, 
and among the higher classes (if I may use the expression' 
in opposition to the opinion of the New York Sun, whose 
editor maintains that we have no classes in this country) 
would have been ashamed to be seen in "Wall Street. Now, 
men in the same sphere are proud of the distinction, both 
socially and financially. In fact Wall Street has become 
a necessity as a healthy stimulant to the rest of the business 
of the country. Everything looks to this centre as an index 
of its prosperity. It moves the money that controls the 
affairs of the world. 

Take the Clearing House, for example, with its 50 billions 
of transactions annually. All but a fraction of this wonder- 
ful wealth, compared with which the stupendous pile of 
Croesus was a mere pittance, passes through Wall Street, 
continually adding to its mighty power. This great power' 
in comparison with which the influence of monarchies is 
weak, is not, like the riches of these, concentrated chiefly on 
itself. It is imparted to all the industries and productive 
forces of the country. Wall Street is a great distributor. 
It is also universal in its benevolent effects, practically un- 
limited by either creed or geography. 

It has taken greater advantage, for the general good, of 
scientific discovery than all the scientific societies combined. 
Wherever the electric wires have penetrated the "Wall Street 
broker has followed. The members of the Stock Exchange 
are, through the power of electricity, in closer sympathy 
with the great heart of civilized humanity than all the mis- 
sionaries and philanthropic societies in the world. They are 
the great cosmopolitans of the age. In practical sympathy 
they outshine the most devoted efforts of the benevolent 
associations of half the continent. They have the means to 
do it, and this comes chiefly from being practical, and from 
their strong antipathy as a body to cant and hypocrisy. 

There are many popular delusions outside the ranks of 
the clergy connected with the effort to form a correct esti- 



16 WAI.I, STREET AS A CIVIXIZER. 

mate of Wall Street affairs by the general public. It is a 
popular delusion that it is a place where people who are 
in the "ring" take something for nothing. No idea could 
be further wide of the mark in regard to Wall Street men 
as a class, however true it may be of some individual 
instances, as in other departments of business. Wall Street 
gives full value for everything it receives, and the country 
at large is deeply its debtor. Some people may think this 
a paradox, but there is nothing more easily demonstrated to 
those who have observed the commercial and industrial 
progress of the country and the age. 

Wall Street has furnished the money that has set the 
wheels of industry in motion over the vast continent, and 
in one century has brought us abreast, in the industrial arts, 
of countries that had from one to two thousand years the 
start of us. In this respect it has assisted nobly to carry 
out the ideas of the fathers of the Constitution. Washing- 
ton, Jefferson, Madison, Franklin and Hamilton laid down 
the doctrine that it would be a betrayal of the interests of 
posterity to limit the productive energies of this country to 
raw material. With our present experience we may think 
it strange that this question should ever have been debated, 
but it was, even after the old tyranny had been obliged to 
loosen its grasp on the struggling enterprise of the young 
Republic. Our old revolutionary sires deserve credit for 
their foresight, but what would have been the fate of their 
commercial philosophy if Wall Street had not supplied the 
sinews of war to cope with the forces of nature, to work our 
mines and build our railroads, and through these and other 
means, to attract the teeming population from every clime 
to cultivate our virgin soil and develop our wonderful in- 
dustries and resources ? 

Apropos of the above observations, I may add that dur- 
ing the debate in the British Parliament, on the recognition 
of the Confederacy, the great manufacturing power in our 
industrial, financial and commercial progress was clearly 



jealous "jingoes" as civiuzers. 17 

exhibited and thoroughly appreciated by British statesmen. 
It was made one of the strongest arguments, too, by some of 
the representatives of our jealous and envious cousins on 
the other side of the " pond," why Great Britain should re- 
cognize and aid the South in the war. Lord Salisbury, then 
Lord Bobert Cecil, at present the leader of the Tory party 
in England, and the advocate of twenty years' coercion for 
Ireland, was one of the bitterest foes of the Union, chiefly 
on this account. He was one of the Vice Presidents of the 
" Southern Independent Association," for the promotion of 
the cause of the Bebellion, and for supplying the Confed- 
erates with money and arms, and for the ultimate object of 
founding an empire of slavery on this continent. 

In his speech then, on the Southern blockade, the future 
Lord Salisbury made the following touching allusion to our 
dangerous prosperity on this side : " The plain matter of 
fact is, as every one who watches the current of history 
must know, that the Northern States of America never can 
be our sure friends, for this simple reason — not merely 
because the newspapers write at each other, or that there 
are prejudices on both sides, but because we are rivals- 
rivals politically, rivals commercially. We aspire to the 
same position. We both aspire to the government of the 
seas. We are both manufacturing people, and in every port 
as well as at every court we are rivals to each other. With 
respect to the Southern States the case is entirely reversed. 
The population are an agricultural people. They furnish 
the raw material of our industry, and they consume the 
products which we manufacture from it. With them, there- 
fore, every interest must lead us to cultivate friendly rela- 
tions, and we have seen that when the war began they at 
once recurred to England as their natural ally." 

Thus we see how anxious Great Britain was to take the 
place which the North has reserved for itself, and so proudly 
maintained in commerce and industry. 

The great coming man, Salisbury, wanted to reduce us all 



18 WAU, STREET AS A CIVIUZER. 

to the position of hewers of wood, drawers of water and 
planters and pickers of cotton, for the special accommodation 
of Great Britain, as the mighty centre of the world's manu- 
facturing industries. This would have given a set-back to 
our civilization, causing us to make a retrogressive move to 
the dark ages. Since then we have afforded this noble lord 
and his nation ample proof that we are very far advanced 
in the manufacturing arts ourselves, and that in many things 
we are far ahead of England, and they are no doubt greatly 
surprised that the arrangement by which England was to 
have all the profit and America all the hard work, has not 
been carried out. 

In this wonderful development of the industrial arts, 
Wall Street money, enterprise and speculation have played 
by far the most conspicuous and progressive part, thus en- 
abling us, in little more than two decades, to outstrip the old 
nations that were so anxious to enslave us, in spite of the 
fact that they had centuries upon centuries the start of us. 
It must be galling to some of these people that we are now 
the most available candidates for the commercial and in- 
dustrial supremacy of the world, and we have attained this 
position, in a great measure, through the instrumentality of 
Wall Street as a civilizer. 



CHAPTEE III. 

HOW TO MAKE MONEY IN WALL STREET. 

How to take Advantage of Peeiodical Panics in Obder 
to Make Money. — Wholesome Advice to Young Spec- 
ulators. — Alleged " Points " from Big Speculators 
End in Loss or Disaster. — Professional Adyice the 
Surest and Cheapest, and How and Where to Ob- 
tain it. 
But few gain sufficient experience in Wall Street to com- 
mand success until they reach that period of life in which 
they have one foot in the grave. When this time comes 
these old veterans of the Street usually spend long intervals 
of repose at their comfortable homes, and in times of panic, 
which recur sometimes oftener than once a year, these old 
fellows will be seen in Wall Street, hobbling down on their 
canes to their brokers' offices. 

Then they always buy good stocks to the extent of their 
bank balances, which have been permitted to accumulate for 
just such an emergency. The panic usually rages until 
enough of these cash purchases of stock is made to afford 
a big "rake in." When the panic has spent its force, these 
old fellows, who have been resting judiciously on their oars 
in expectation of the inevitable event, which usually returns 
with the regularity of the seasons, quickly realize, deposit 
their profits with their bankers, or the overplus thereof, 
after purchasing more real estate that is on the up grade, 
for permanent investment, and retire for another season to 
the quietude of their splendid homes and the bosoms of their 
happy families. 

If young men had only the patience to watch the specu- 
lative signs of the times, as manifested in the periodical 
egress of these old prophetic speculators from their shells 
of security, they would make more money at these intervals 



20 HOW TO MAKE MONEY IN WAU, STREET. 

than by following up the slippery "tips" of the prof essional 
"pointers" of the Stock Exchange all the year round, and 
they would feel no necessity for hanging at the coat tails, 
around the hotels, of those specious frauds, who pretend to 
be deep in the councils of the big operators and of all the 
new " pools " in process of formation. I say to the young 
speculators, therefore, watch the ominous visits to the Street 
of these old men. They are as certain to be seen on the eve 
of a panic as spiders creeping stealthily and noiselessly 
from their cobwebs just before rain. If you only wait to 
see them purchase, then put up a fair margin for yourselves, 
keep out of the "bucket shops" as well 'as the "sample 
rooms," and only visit Delmonico's for light lunch in busi- 
ness hours, you can hardly fail to realize handsome profits 
on your ventures. 

The habit of following points which are supposed to 
emanate from the big operators, nearly always ends in loss 
and sometimes in disaster to young speculators. The latter 
become slavish in their methods of thought, having their 
minds entirely subjected to others, who are presumed to do 
the thinking for them, and they consequently fail to cultivate 
the self-reliance that is indispensable to the success of any 
kind of business. 

To the question often put, especially by men outside of 
"Wall Street, " How can I make money in Wall Street ?" 
there is probably no better answer than the one given by 
old Meyer Eothschild to a person who asked him a similar 
question. He said, "I buys ' sheep ' and sells ' dear.' " 

Those who follow this method always succeed. There 
has hardly been a year within my recollection, going back 
nearly thirty years, when there have not been two or three 
squalls in " the Street," during the year, when it was possi- 
ble to purchase stocks below their intrinsic value. The 
squall usually passes over in a few days, and then the lucky 
buyers of stocks at panic prices come in for their profits 
ranging from five to ten per cent, on the entire venture. 



HOW TO REAUZE FIFTY PER CENT. 21 

The question of making money, then, becomes a mere mat- 
ter of calculation, depending on the number of the squalls 
that may occur during any particular year. 

If the venture is made at the right time — at the lucky 
moment, so to speak — and each successive venture is for- 
tunate, as happens often to those who use their judgment in 
the best way, it is possible to realize a net gain of fifty per 
cent, per annum on the aggregate of the year's investments. 

In this way it is easy to see how the rich will get richer, 
and the poor poorer. 

Sometimes men make money in Wall Street by strange 
turns in their fortunes that appear like having been gov- 
erned by a special Providence, and this sometimes occurs 
when men appear to be utter wrecks. 

One of the strangest examples of this kind, in my per- 
sonal experience, occurred in the summer of 1885. 

A man called at my office utterly broken down in spirit, 
but with a few hundred dollars left out of many thousands 
that he had possessed a few months previously. 

" I read your letter of the third of July," he said, " and 
had some mind to act on the advice which it contained, but 
was unfortunately dissuaded therefrom by reading an article 
in a city paper by a very able writer, who had got the bear- 
ish mania, then prevalent, on the brain, and who, I am in- 
formed, is now, like myself, almost ruined." 

"I hardly know what to do," he continued. "I have a 
few hundred dollars left, which I will leave with you, and 
you can use your pleasure with it. I am going out to the 
country for the remainder of the summer. I will leave my 
address with you, and, if there is any good result, you can 
let me know of it. I really don't hope for much, and of 
course, I need hardly tell you that, in the event of being 
i wiped out,' you need not apply to me for more margin. 
Let this go with the rest," he added, in a despairing tone. 

The man walked sadly out, and I did not see him again 
for months. I invested his pittance on the carte blanche 



22 HOW TO MAKE MONEY IN WAU, STREET. 

order which he had given me, to the best of my judgment. 
The result was favorable, and his account began to accumu- 
late. He was duly advised, according to our business 
methods, of his good luck, but I did not hear anything from 
him personally for several months. 

One day, a portly gentleman, with rosy health beaming 
in his face, stepped into my private office, and was quite 
profuse in his thanks to me. 

a Well," I said ; " I have but a hazy recollection of your 
acquaintance, if I know you at all." 

" Don't you recollect," he said, " the time I went to the 
country in summer, when I told you my case, and how I had 
been unfortunate in speculation?" 

" And are you the man who went to the country in despair 
to die V 9 1 asked, in surprise at his changed appearance. 

" I am," he replied, " and I owe the wonderful change 
which you now see to your timely advice. I staked almost 
my last dollar on that counsel, and now I am comfortably 
fixed through your management of the small fund placed at 
your disposal." 

Now, this was an example of a man who did make money 
simply by taking the advice that was freely tendered him. 

There are others who lose, in spite of all that the most 
honest judgment can do to prevent them. 

Some men, when they have money, are so fearfully perverse 
that all attempts to get them to do the right thing only have 
the opposite effect, and they prefer to follow every wild 
rumor. 

One day, for instance, a man gave me an order to buy a 
thousand shares of Erie without limit. The order was exe- 
cuted at 94. I had no sooner bought it than the stock went 
down. 

My customer returned in a short time and ordered the 
stock to be sold. It was then 92 1. 

In half an hour afterwards he returned again and ordered 
it bought back again, without any limit as before. It was 
bought back at 95. 



SHUN DELUSIVE RUMOR MONGERS. 23 

After consulting with, other friends for some time he 
ordered it sold again. The market by that time was 90. 

He then came back the fifth time, and said : "I first saw 
one man who told me to buy, and then another who told me 
to sell. I understand one is called a ' bull ' and the other a 
' bear.' About these names I don't know much, but I do 
know now that I am a jackass." 

This affords a good illustration of the way the average 
speculator is managed and perplexed in Wall Street. There 
is a means of avoiding such a peck of trouble, however, if 
he would only take a little wholesome advice, wait patiently 
for a proper opportunity, and not rush headlong to purchase 
on the "tips'* of the delusive rumor mongers. He would 
then begin to learn how to make money in Wall Street. 

As I have pointed out in another chapter, speculation is 
a business that must be studied as a specialty, and though 
it is popularly believed that any man who has money can 
speculate, yet the ordinary man, without special training in 
the business, is liable to make as great a mistake in this 
attempt, as the man who thinks he can act as his own law- 
yer, and who is said "to have a fool for a client." 

The common delusion, that expert knowledge is not re- 
quired in speculation, has wrecked many fortunes and repu- 
tations in Wall Street, and is still very influential in its 
pernicious and illusory achievements. 

When a man wants correct advice in law he goes to a 
professional lawyer in good standing, one who has made a 
reputation in the courts, and who has afforded other evi- 
dence to the public that he is thoroughly reliable. No man 
of average common sense would trust a case in law to a bar 
room "bummer'' who would assert that he was well ac- 
quainted with Aaron J. Vanderpoel, Eoscoe Conkling, and 
Wm. M. Evarts, and had got all the inside ''tips" from 
these legal lights on the law relating to the case in question. 
The fellow would be laughed at, and, in all probability, if 
he persisted in this kind of talk, would be handed over to 



21 HOW TO MAKE MONKY IN WAU, STREET. 

the city physician to be examined in relation to his sanity, 
but in Wall Street affairs men can every day make similar 
pretensions and pass for embodiments of speculative wis- 
dom. 

If speculators are caught and fleeced by following such 
counsel, the professional brokers who are members of the 
Stock Exchange, are no more to blame than the eminent 
lawyers to whom I have referred would be for the upshot 
of a case that had been taken into court on the advice which 
some irresponsible person had pretended to receive from 
these celebrities of the New Yorh Bar. 

Professional advice in "Wall Street, as in legal affairs, is 
worth paying for, and costs far less in the end than the 
cheap " points " that are distributed profusely around the 
Street, thick as autumn leaves in Yallombrosa, and which 
only allure the innocent speculator to put his money where 
he is almost certain to lose it. 

My advice to speculators who wish to make money in 
Wall Street, therefore, is to ignore the counsel of the bar- 
room "tippers" and " tipplers," turn their backs on "bucket 
shops," and when they want u points " to purchase, let them 
go to those who have established a reputation for giving 
sound advice in such matters, and who have ample resources 
for furnishing correct information on financial topics, as 
well as a personal interest in making all the money they 
can for their clients. 

There is no difficulty in finding out such reliable men 
and firms in the vicinity of Wall Street, if speculators will 
only read the newspapers, or make inquiry of the first 
messenger boy they may happen to meet. 



CHAPTEK IY. 

IMPORTANCE OF BUSINESS TRAINING. 

Sons of Independent Gentlemen make very bad Clerks.— 
They become Unpopular with the Other Boys, and 
must Eventually Go. — Night Dancing and Late Sup- 
pers don't contribute to Business Success. — Give 
Merit its True Beward.— Keeping Worthless Pre- 
tense in its True Position.— Kunning Public Offices 
on Business Principles. — A Piece of Gratuitous 
Advice for the Administration. — A College Course 
not in general calculated to make a Good Business 
Man. — The Question of Adaptability Important. — 
Children should be Encouraged in the Occupation 
for which they show a preference.— thoughts on 
the Army and Navy. 

I HAVE usually found that the sons of independent gen- 
tlemen, who have great expectations, make very poor 
clerks and don't develope into Good Wall Street men. 

Their expectations seem to dwarf the ability that might 
develope under the more favorable auspices of being 
obliged to paddle their own canoe. Like the light under a 
bushel, referred to in the Good Book, their brilliant qualities 
are obscured and circumscribed by the paternal protection 
in prospect. They have not a sufficient incentive to work, 
because they know that all they require for their natural 
wants will fall easily into their laps. The motives, there- 
fore, which usually develope the greatest mental qualities 
are absent and the qualities themselves lie dormant, 
and frequently decay like poppy seeds in their seed 
vessels, without being productive of the fruits which are the 
result of industrial habits and the desire for acquisition 
Such young men, instead of being a help to an office into 
which they happen to be thrust, often through friendship and 
favoritism, are a great hindrance and a stumbling block in 
the path to promotion of other young men. 



26 IMPORTANCE OF BUSINESS TRAINING. 

After many ineffectual attempts to reform and remodel 
them, they have generally to be discarded, as the drone bees 
are ejected from the rest of the industrious hive. And they 
usually become as unpopular with the other boys as the 
drone does with his comrades who make the honey and will 
not suffer the idle fellow to feast on the fruits of their labor. 

Young men who have nothing but their own resources to 
depend upon will be found far more meritorious than this 
higher class. There are some eminent exceptions, but it 
takes a large amount of good sense to counteract the conceit 
instilled by the idea of financial independence by birth. 

The latter are more liable to youthful and enervat- 
ing excesses, as they have the means to indulge in nocturnal 
amusements that are not conducive either to clear brains or 
active habits during the day. 

Night dancing and late suppers, with some of their social 
concomitants, when habitually indulged, don't contribute to 
business success. I know how this is myself, and therefore 
speak feelingly; but I don't lay myself open to the charge of 
egotism when I say that I have never permitted the habit to 
get the better of me. 

I am not setting myself up as a censor of other men's 
habits, nor attempting to utter mere moral or religious 
cant. I am simply discussing the question from a scientific 
and physical standpoint, and I say that these habits don't 
contribute to business success, but, on the contrary, form one 
of the greatest hindrances to it. They make any man, no 
matter how strong he may be, physically unfit for ordinary 
business. These u recreations " up town, however attractive 
and delightful they may be, don't fit a young man for business 
down town. The line must be drawn somewhere. Let us 
draw it, say, at Fourteenth street. 

There has been much said and written about Civil Service 
Eeform by various authorities from President Cleveland 
down to Dorman B. Eaton and the Custom House officials. 
The great rule to follow is to give merit its true reward 



A HINT TO GOVERNMENT OFFICIAL 27 

This draws out the best efforts of the recipient, where real 
merit is found, and keeps the drones beyond the pale of 
competition. It develops the qualities that are worthy of 
being encouraged, and keeps worthless pretense in its 
true position. This is the rule I have adhered to in my 
office, and it works like a charm. My office, though not 
quite so large as the Custom House or Post Office of New 
York city, I think affords a fair test of what could be done 
on the largest possible scale. 

If public office is a public trust, and we have the high 
authority of President Cleveland and of the New York 
Tribune for saying so, I think it can be administered on the 
same business principles that have contributed to the success 
of some of the largest and most successful firms in the world; 
and among these, I think I can say without egotism, as the 
matter is capable of demonstration, that the house of which 
I have the honor to be the head, stands second to none in 
the attributes to which I have referred. 

The reader may say, " This is a puff for his own house." 
Well, even so. If it is, it is true, and will bear the strictest 
investigation. So I don't see why I should feign any false 
modesty about the assertion. It would be sheer affectation 
to do so. 

Collegiate education is a great question for debate among 
literary men, journalists and business men, as to its utility 
in forming the character of youth for business life. As the 
college curriculum and training stand at present, the ordi- 
nary course is not in general calculated to make a good 
business man. It is erroneously regarded by some people 
as a kind of substitute for business training in the earlier 
years of a young man's life. There could be no greater 
mistake in the beginning of a business career. It is in 
many instances not only a hindrance, but absolutely fatal to 
success. To put a young man in an office fresh from college^ 
on a level with one of the same age who has been training 
in business methods since he left the common school, is 
demoralizing to both. 



28 IMPORTANCE OF BUSINESS TRAINING. 

I wish to have it distinctly understood that in the fore- 
going remarks I have not made any attempt to cast the 
slightest reflection on the personal attributes and abilities 
of any young man in any line of life or status of society, 
and I make this statement perfectly independent of the 
mere social incident as to whether the young man in ques- 
tion may part his hair in the middle or assume other dudish 
airs. That is his business, and I have no right to trench on 
the sacred precincts of his individuality, nor do I mean to 
do so. As a rule I stick to my own business. I simply in- 
tend to imply that when a dude happens to come into my 
office, where I think he will find the most aesthetic appoint- 
ments in the way of furniture and the business arrange- 
ments, if he should, upon thus entering into my employment, 
come to the sudden conclusion that this sestheticism of 
office furnishing implied any plea for idleness or assumption 
of airs on his part, he would very soon experience a rude 
awakening from his charmed lethargy of conceit, and if he 
were not prepared to undertake in a calm and appreciative 
tone of mind the first lessons of business industry, I would 
politely bid him an affectionate adieu, and on parting tell 
him very kindly that though his great natural gifts might be 
thoroughly adapted to shine in another sphere of life, he 
was both by nature and education totally unfitted to play 
the most humble part in a business career, such as that of 
which my firm affords a fair and most successful example. 

The same remarks will apply to any other young man 
who does not appreciate his vocation, and try to know him- 
self as old Seneca taught. 

I don't insidiously single out the dude for an odious com- 
parison. The remark will apply just as appropriately to 
the young man who is better fitted for a blacksmith or a 
farmer, or perhaps a preacher, than a business man or a 
financier. 

" All blacksmiths," says the Eev. Eobert Collyer, " can't 
become preachers, and it would be bad for the world if they 



FOLLOW REFERENCES. 29 

did.'* There is a good deal of philosophy in the remark of 
this popular preacher, and quite to the point on the subject 
which I am now attempting to handle. 

In fact, there is nothing in this world would grieve me 
more than the prospect of being obliged to reflect in future 
years on the fact that I had been instrumental in keeping a 
young man's " nose to the grind-stone," so to speak, in 
my office, where he would make a very poor employee with- 
out the chance of attaining average success, while in a ca- 
reer for which nature and education had fitted him, he 
might not only be happy and successful, but make his mark 
as a star of the first magnitude. 

When viewed in this light, the question of adaptability 
becomes a serious affair, for young men starting in life, and 
for their parents, who often sacrifice a great deal of their 
worldly comforts and peace of mind to launch their fond 
offspring. 

The best thing for parents to do, then, as a general rule, 
is to encourage their children in that occupation or avoca- 
tion for which they show a decided preference. Whatever 
young men do voluntarily, as a rule, they do well. This is 
especially illustrated in the lives of youths who exhibit an 
inclination for a military pursuit, which offers the least in- 
ducement to human avarice, and attracts the mind through 
the more sentimental motives of patriotism and the love of 
glory. But in our present civilization there are national 
feelings that must be inculcated and encouraged. 

I entertained at my Newport residence, during thw past 
Summer, the officers of the 23d Brooklyn regiment of the 
National Guard of the State of New York, because I felt it 
a matter of duty to do so, as well as a privilege to do my 
part in contributing to the encouragement of the young men 
who have taken it upon themselves voluntarily to be mem- 
bers of that militia company. 

These young men visit Newport at very great cost to 
each one, as they themselves have to contribute to the ex- 



SO IMPORTANCE OK BUSINESS TRAINING. 

penses attending the trip, and their presence in Newport in 
going through, regularly each day, their drills and parades 
with as much precision and correctness as though they all 
had been graduates of West Point, all well equipped and 
well attired in plain but most becoming military apparel, 
made a most interesting scene to witness, contributing not 
a little to the amusement and gratification of the residents 
of that famous watering place. They are becoming dis- 
ciplined to be soldiers. They are mostly young men of 
good families, of profitable occupation, many in business 
for themselves and others trustworthy clerks in the employ 
of others, with good salaries ; consequently they make a 
great sacrifice to themselves in the time that they thus be- 
stow upon such excursions as well as ordinarily in the drills 
which they have to go through, when at home, once or twice 
each week, frequently oftener. What is the incentive in 
this personal sacrifice on their part ? 

The answer is, the spirit of patriotism, and that really is 
what it means, for in the event of a foreign invasion or in- 
ternal disturbances, their services are pledged to the State 
and to the Government. They are therefore liable to 
receive at a moment's notice a call from any quarter to go 
to the front with their lives in their hands, leaving their fam- 
ilies, their wives, their children, their old parents, their 
business, leaving all and requiring a farewell at their de- 
parture, as the dangers they may have to encounter are 
threatening in character and, not unlikely, may prevent 
their ever returning alive. 

Taking this view of the subject, therefore, these young 
men should be encouraged by all who have the means and 
power at their hand, and to the full extent of their ability. 
Whenever they go on missions of State defense, it is 
only just and fair that they should be received as soldiers, 
and accorded the honors which soldiers merit. They are 
entitled to it to a greater extent than the regular soldiers of 
the United States standing army. These men do not make 



NATIONAL DEFENDERS. 31 

one-half the sacrifice that the young militia do, nor do they 
make any better soldiers on the battle-field. 

These militia soldiers, when they go to the front, leave 
behind them enough, in the way of property, good homes 
and families, to make them more enthusiastic to fight for 
victory, than the regular army, so that they may return to 
their own domestic circles with the laurels that victory 
gives. 

In this country we do not desire standing armies, for 
we do not wish the expense entailed upon the Govern- 
ment to sustain them, but we do want the young men 
encouraged to do military duty and be prepared for action 
when it comes. The only money, therefore, that the Gov- 
ernment need expend to protect our continent is a good 
militia force in each of the various States, to be well dis- 
ciplined. In that case our country will be prepared to 
meet foreign foes. 

I am also opposed to a large standing naval force, not 
only on account of the expense, but also because our coun- 
try is less likely to get into trouble with other nations, 
providing we have no ships to send into their waters. 
Naval officers are often very impetuous and chivalrous and 
sometimes fancy they have grievances to repel, which are 
largely imaginary, and with them it is a word and a blow. 

With a thoroughly equipped and largely efficient naval 
force, we might thus not unlikely be driven into a conflict 
without cause or reason with some friendly power. Our 
country is happily located far in the distance from the 
quarrelling nations of Europe, and our being so removed is 
our protection. It is not desirable to be brought in closer 
contact by sending our naval vessels into their waters, to be 
under their fire. The policy of this nation is peace and 
good will to all mankind. What gain would it be to 
America to have a conflict with England, even though we 
should conquer in the end, or France, or Germany, or 
Eussia ? We couldn't tow any of these countries to ours, 



32 IMPORTANCE) OF BUSINESS TRAINING. 

nor could we hold on to our conquest as a permanent pos- 
session ; neither should we desire to do so, as we have terri- 
tory enough in the 38 States which comprise the United 
States of America, already, without desiring to annex that 
of any of our far-off neighbors. 

And if an emergency should arise in what has been called 
the last resort of kings, namely, the necessity of going to 
war, it would be found that the importance of this training 
in the special business of war could then be appreciated at 
its true value. 

The importance of business training, that is, training for 
the special occupation in which a man's energies are to be 
developed, is always made apparent when those energies are 
put to the test of competition, or are called upon to put 
forth an extraordinary effort. If a man has not got the 
special training, whether in the army or in civil life, he is 
never reliable in an emergency, but is like that weak and 
vacillating friend which old Solomon compared to a broken 
ankle. 

I say, therefore, to the young man of the rising genera- 
tion, while you don't relax any effort to procure all the 
education that your time and means will afford, above all 
things, don't neglect the paramount importance of business 
training. 



CHAPTER V. 

PERSONAL HONOR OF WALL STREET MEN, 

Bbeach of Trust Bake Among Wall Street Men. — The 
English Clergyman's Notion of Talmage's Tirades 
Against Wall Street. — Adventurous Thieve? Have 
No Sympathizers Among Wall Street Operators. — 
Early Training Necessary for Success in Specula- 
tion. — Ferdinand Ward's Evil Genius. — A Great 
Business can only be Built up on Honest Principles. — 
Great Generals Make Poor Financiers, Through 
Want of Early Training.— Practical Business is 
the Best College. 

THERE is no place in the world where people are trusted 
so much on faith as they are in Wall Street ; not even 
in the Church. 

The business is one of mutual confidence, and each day 
there are numerous opportunities for men to secure many 
millions of dollars of other people's money and take them- 
selves safely off to that Paradise of defaulters and abscond- 
ers over the Border. Yet instances of this nature are com- 
paratively rare when we consider the large number of trans- 
actions and the immense amount of money handled in Wall 
Street. 

The men of Wall Street have, therefore, become worlds 
renowned for straightforward dealing, and have thus ob- 
tained the first position as leading spirits in the speculative 
affairs not only of their own country, but of the entire world. 
Wherever the speculative spirit of the age has obtained a 
foothold, there Wall Street is a household word, and Wall 
Street men are held in the highest esteem. It has become 
a term familiar to the ears of those even who know nothing 
about the business which has made its name almost universal. 

u What is that Wall Street ?" said an English curate to a 
friend of mine who recently visited Liverpool. "What a 
queer place," he continued, " for Mr. Talmage to have his 
Tabernacle.'' 



34 PERSONAL HONOR OF WALI, STREET MEN. 

The English divine, evidently only having " caught on" 
to isolated sketches of the Brooklyn preacher's calumnious 
invectives, thought they were actually delivered among the 
bulls and bears, and that Talmage had the boldness to 
beard these ferocious animals in their den. 

It is true the honor of Wall Street is sometimes slightly 
tarnished, especially in the eyes of those who reside at a 
great distance, owing to the occasional delinquencies of dis- 
honorable men, who consider Wall Street men and Wall 
Street money fair game for swindling operations. These 
are for the most part outsiders, who pounce upon the Street 
as their illegitimate prey, after probably making a show of 
doing business there. 

There is no place, of course, where confidence men have 
the opportunity of reaping such a rich harvest when they 
can succeed in establishing the confidential relations that 
help them to secure their swag. But Wall Street proper 
is not any more responsible for such men than the Church, 
whose sacred precincts are used and abused by the same 
social pariahs in a similar manner. The Street is the victim 
of these adventurers, and has no more to do with nurturing 
and aiding them than the Church has. 

What should be said of a financier who would have the 
temerity to assert that the Church was an asylum for swin- 
dlers, and that thence they issued forth to commit their law- 
less depredations on society % He would be tabooed by all 
intelligent people. Yet there would be about as much truth 
in such a statement as in most of the eloquent anathemas 
and objurations launched from the pulpit every Sunday 
against Wall Street. 

There is no place on this earth where adventurous thieves 
have fewer sympathizers than in Wall Street, except per- 
haps in Pinkerton's and Byrnes' detective bureaux. 

There is another popular delusion with regard to those 
who don't succeed in Wall Street. Their failure is fre- 
quently attributed to sharp practice on the part of the old 



A DANGEROUS GENIUS IN FINANCE. §5 

habitues of the Street. People forget that the business of 
speculation requires special training, and every fool who 
has got a few hundred dollars cannot begin to deal in stocks 
and make a fortune. The men who don't succeed are usually 
those who have spent their early life elsewhere, and whose 
habits have been formed in other grooves of thought. 

The business of Wall Street requires long and close train- 
ing in financial affairs, so that the mind may attain a flexi- 
ble facility with the various ins and outs of speculative 
methods. If this training is from youth upward, all the 
better. It is among this class that many of our most suc- 
cessful men are to be found, though there are some eminent 
examples of success among those who began late in life. It 
will be found, however, that the latter must have a special 
genius for the business, and genius, of course, discounts all 
the usual conditions and auxiliaries ; but among ordinary 
intellects early training is generally indispensable to finan- 
cial success. 

It seldom happens, moreover, that the early trained man 
from youth up does any great wrong. 

Ferdinand Ward may seem an exception to this rule, but 
he had a born genius for evil, and though he had all the 
early advantages of Timothy and Samuel the Prophet, with 
a higher civilization thrown in, so utterly incorrigible was 
his nature that nothing but prison walls and iron bars could 
prescribe bounds to his rascality. He is an extraordinary 
exception, a genius of the other extreme, against whose 
subtle operations society must always be on its guard ; but 
he is only one of the dangerous exceptions that prove the 
rule for which I am contending, the rule that early training 
in finance more, perhaps, than in any other field of human 
energy, is the great desideratum. 

If such a man is unsuccessful, dishonor seldom accom- 
panies his misfortunes. He may pass through the whole 
catalogue of financial disasters and their natural results. 
He may fall to the gutter through over-indulgence in liquor 



36 PERSONAL HONOR OF WAU, STREET MEN. 

and the despair attendant on a run of bad luck or unfor- 
tunate connection with wicked partners, but he is still capa- 
ble of rising from the very ashes of his former self. He 
will never stoop to swindle, no matter how low the rest of 
his moral condition may be brought. 

No great business can be built up except upon honest and 
moral principles. It may flourish for a time, but it will top- 
ple down eventually. The very magnitude to which the 
business of Wall Street has grown is a living proof of its 
moral stamina. It is impossible, in the social and moral 
nature of things, to unite a large number of men, represent- 
ing important material interests, except on principles of 
equity and fair dealing. A conspiracy to cheat must always 
be confined to a small number. 

The most successful men of Wall Street, to my own per- 
sonal knowledge, are those who came to the Street young, 
and have " gone through the mill," so to speak ; those who 
have received severe training, who have had some sledge- 
hammer blows applied to their heads to temper them, like 
the conversion of iron into steel. 

These are some of the prerequisites of a successful finan- 
cial career. 

One of the most common delusions incident to human 
nature in every walk of life is that of a man who has been 
successful in one thing imagining he can succeed in any- 
thing and everything he attempts. In general, overweening 
conceit of this kind can be cured by simple experiments that 
bring men to a humiliating sense of their mortal condition 
and limited capacity. When the experiment is tried in 
Wall Street, however, to these healthy admonitions are 
frequently added irreparable disaster and overwhelming 
disgrace. 

I shall note a few examples within the memory of news- 
paper readers still living. The brief panic of 1884 brought 
several instances of this character to the surface. Some of 
them had fought our battles for national existence and 
preserved the Union when this achievement seemed almost 



WHY GENERAI, GRANT WAS VICTIMIZED. 37 

hopeless. Their fame as generals was as extensive as 
history itself. They had planned and executed projects 
with success on which the destiny of a great nation, and 
perhaps the destiny of other nations, had impended, yet 
when they attempted to manage banks, railroads and finan- 
cial operations they became hopelessly entangled. 

The great captain of the Union's salvation was as help- 
less as a babe when Ferdinand Ward and James D. Fish 
moved upon his works. The eye that took in the whole 
situation at a glance at Yicksburg, Eichmond and Appo- 
matox was totally unable to penetrate the insidious and 
speculative designs of the " Young Napoleon of finance." 

General Grant was a victim, not so much to the sincere, 
veracious and unsuspecting attributes which were so largely 
predominant in that great man, as to his want of early 
training in financial business affairs, and to the fact that he 
was unable to appreciate its necessity in dealing with sharp 
business men of loose morals. Generals Winslow and Porter 
fell into a similar error of judgment in the West Shore 
Railroad matter. Their mistake came near being a serious 
blow to the railroad interests of this country. General 
Wilson, of the New York and New England, and General 
Gordon were similarly unfortunate. The common mistake 
committed by these worthy men, to whom the country owes 
an inestimable debt of gratitude, was the chief cause of the 
"general demoralization," to which Treasurer Jordan 
facetiously but indignantly alluded when denouncing rail- 
road methods, and which from time to time has played sad 
havoc with some of the best securities in the country. 

Therefore, I say to all who have sons destined for a busi- 
ness career, let your cherished offspring have the advantage 
of early practical training in the particular line of business 
for which you may consider them best adapted, and do so, 
even to the partial neglect of their school and college educa- 
tion. Practical business is the best school and college in 
which they can possibly graduate. I shall attempt to make 
this point clearer in another chapter. 




SALMON P. CHASE, 

Secretary of the IT. S. Treasury during the war period. 



CHAPTEE VI. 

WALL STREET DURING THE WAR. 

The Financiers of Wall Street Assist the Government 
in the Hour of the Country's Peril. — The Issue of 
the Treasury Notes. — Jay Cooke's Northern Pacific 
Scheme Precipitates the Panic of 1873. — Wall 
Street Has Played a Prominent Part in the Great 
Evolution and Progress of the Present Age. 

WALL Street came to the rescue of the country when the 
war broke out. The Government then did not have 
money enough to pay the interest on the debt, and was sore- 
ly embarrassed for a time. The Hon. S. P. Chase, Secretary 
of the Treasury, sent word to Mr. Cisco, the Sub-Treasurer 
in New York, to do everything in his power to raise the 
money required to sustain the nation's credit. 

Mr. Cisco apprised the " Street " of the instructions he 
had received from Washington concerning the empty con- 
dition of the Treasury. He showed a number of the leading 
operators and financiers that within a few days the interest 
on the accruing obligations would have to be paid, or the 
Government paper should go to protest. It was clearly 
demonstrated that if funds could not be raised the Govern- 
ment should be placed in a perplexing position, that would* 
in all probability, greatly complicate and prolong the struggle 
for national existence. It was one of the most critical moments 
in the whole history of the Eepublic, and the emergency 
required clear, decisive judgment, and promptitude of 
action. 

Wall Street men perceived the gravity of the situation at 
a glance. If the Government's credit should collapse, it 
was feared that the whole framework of our political system 
would be endangered. 

The foundation of all securities was threatened with a 
destructive upheaval, and most serious consequences were 



40 WAU, STREET DURING THE WAR. 

likely to ensue, menacing a contraction of all values. The 
prospect was very dark. Not a ray of hope shone through 
the sombre clouds that hung dismally over the Union. The 
internal dissensions of our people, and the apparent destruc- 
tion of our national life, were watched with the deepest 
interest by European friends and foes— the latter being then 
largely in the majority, and only waiting a favorable oppor- 
tunity to pounce upon what they considered their destined 

P^y- 
Manifest destiny seemed to have leagued all her forces in 
opposition to us. The stoutest hearts quailed at the pros- 
pect of our dissolution as a nation. 

At this momentous juncture, when there was no eye to 
pity, and when no other arm seemed mighty enough to save, 
the Wall Street men were equal to the occasion. They put 
their heads together, came to the front, and resolved to ex- 
tricate the Government from its perilous position. It is true 
that they were well paid for it. They charged twelve pei 
cent, for the loan, but that was nothing when the risk ia 
taken into account. It was then almost impossible to get a 
loan at any rate of interest. By some of the great nations 
of Europe the risk then involved in such a loan was re- 
garded in about the same light as the people of this country 
now estimate the present chances for realizing on Confeder- 
ate paper money, or Georgia bonds of the old issue. 

In this state of public feeling, Lombard Street was not in 
a favorable mood to negotiate loans with this country, and, 
the whole fraternity of the Kothschilds shut their fists on 
their shining shekels and shook their heads negatively and 
ominously at the bare mention of advancing money to the 
once great but now doomed Republic. 

Money was dear at the time, and the Government was 
only obliged to pay what could have been obtained in other 
quarters. Curiously enough, private property then was con- 
sidered better security than the Government endorsement, 
on the principle — which was not a very patriotic one, though 



FINANCIERS RAISING THE SINEWS OF WAR. 41 

in reality true — that the country could survive its form of 
government. That form, however, the best the world has 
yet seen, survived the shock and maintained its autonomy. 
That it did so was in a large measure due to the prompt 
action of Wall Street men in raising the sinews of war at 
the incipient stage of the rebellion. Had they failed to do 
so, it is not improbable that the repulse at Bull Hun might 
have proved a decisive blow to the Union, and plunged the 
country into a state of anarchy from which nothing but a 
despotism almost as bad could have retrieved it. 

The negotiation of this loan brought out the twelve per 
cent. Treasury notes. After this issue the rates fell. Then 
came the 11 and the lOf per cent, issues, and subsequently 
the well-known and long to be remembered 7 3-10 Treasury 
notes. 

After this issue had been popularized, successfully dis- 
posed of, and finally taken up at maturity by the 5-20 
loan, Jay Cooke was quick to issue, after their pattern, his 
famous 7 3-10 Northern Pacific Eailroad bonds. Evidently 
he had a patent for negotiating that famous 7 3-10 per cent, 
railroad loan, as almost every clergyman, Sunday-school 
teacher and public benefactor were found to have invested 
in them, when the crash came, and although the road was 
the means of his financial downfall, with the ruin of an 
innumerable number of others besides, who were dragged 
into the same speculative whirlpool, this unfortunate event 
was not entirely an unmixed evil. 

It is true that this was the main and visible cause of 
precipitating the panic of 1873, of which I shall speak more 
fully in another chapter, but the Pacific road was the great 
pioneer in opening up the Par "West, and developing its 
material resources, the great artery of the Western railroad 
system, conveying vigorous and durable vitality to the in- 
dustrial life of the expansive regions beyond the Kockies. 

Thus, in taking a retrospect of my twenty- eight years in 
Wall Street, I find that what sometimes appeared to be 



42 WAU, STREET DURING THE WAR. 

great evils have been succeeded by compensating good, fate 
counter-balancing fate, as the Latin poet has it. It was so, 
as I have previously observed, after the panic of 1857, It 
was so after the convulsion of 1873, and though I have only 
historic evidence to guide me in regard to the earlier history 
of the Street, I find it was so after 1837. So, the maxim that 
history repeats itself has been fully verified in Wall Street. 

So, now that I have relapsed into a reflective mood on 
this subject, a host of important associations connected with 
the main issue rush upon me. The prominent idea that 
stands out in bold relief is the rapid and wonderful progress 
made in Wall Street during the period that I have under- 
taken to chronicle. And not only so, but the rapid strides 
that have been made in everything, almost universally, dur- 
ing that time, present a vast theme for consideration. The 
part that Wall Street men have taken in this mighty evolu- 
tion is the topic that concerns me most at present. As I 
attempt to progress with my subject, I observe this division 
of it becoming more expansive, so that I find myself in the 
position of the Irishman when he ascended to the top of a 
mountain. After recovering from the first effects of his sur- 
prise, he exclaimed : " I never thought the world was so 
large!" 

So it is with me. I never thought that Wall Street was 
so big, nor that Wall Street affairs were so extensive, until 
I began to write about them. They expand, as well as im- 
prove, surprisingly on closer acquaintance. I only hope 1 
shall be able to impress this idea more vividly on the minds 
of my clerical friends, and others who have been misguided 
in this respect, chiefly on hearsay and irresponsible evidence^ 
and who, I am sorry to say, have been the well-meaning, 
but over-zealous instruments of misleading others. 

To come to an approximate deduction of facts, then, it is, 
I think, a fair estimate of the general progress of humanity, 
to say that there has been greater material advance in every- 
thing that relates to a higher civilization, and the greatest 



SPECULATION A PIONEER OF PROGRESS. 43 

good to the greatest number, during the last thirty years, 
than in all the previous time that has elapsed since the period 
that the father of history, old Herodotus, began to chronicle, 
in his racy style, the real and imaginary events of the human 
family. 

The part that Wall Street has played in this amazing 
progress has been comparatively large, and would, if thor- 
oughly investigated and fully discussed, make a larger book 
than I have time to write at present. 

I can only glance at the prominent topics and leading 
events in the extensive and somewhat sensational history of 
Wall Street, and sketch briefly the conspicuous features in 
the lives of certain celebrities who have been conspicuous 
in the history of speculation, and of those who have been 
prominent in the financial affairs of the country. 



CHAPTER VII. 

MORE WAR REMINISCENCES.— BRITISH AND NAPOLEONIC 

DESIGNS. 

How Napoleon Defied the Monkoe Doctrine. — The Ban- 
quet to Eomero. — Speeches by Eminent Financiers, 
Jurists and Business Men. — The Eloquent Address 
of eomero against french intervention. — napoleon 
shows his Animus by Destroying the Newspapers 
Containing the Eeport of the Banquet. — The Em- 
peror Plotting with Eepresentatives of the Eng- 
lish Parliament to Aid the Confederates and Make 
War on the United States. 

THEEE were other critical periods during the war when 
Wall Street came to the front, besides the one in which 
it rendered such timely aid to the Government in its finan- 
cial embarrassment. One of these was when the Emperor 
of the French, Napoleon III., showed his cloven foot and 
exhibited anew the rancorous disposition which ten years 
previously had crushed the Eepublican hopes of La Belle 
France by the murderous Coup cPJEJtat. He made a bold at- 
tempt to plant that blood-stained foot on this fair soil, in 
open defiance of the Monroe doctrine, and to crush the lib- 
erties that his immortal uncle, even in the full flush of his 
great conquests, dared not attack and was forced to respect. 

I shall here relate an incident of this period, which, I 
think, has not obtained the prominence in our national 
history to which, I believe, it is justly entitled. 

Senor Eomero, then Mexican Minister at Washington, 
was invited to a public dinner in New York, in order that 
proper occasion might be found to discuss the situation with 
regard to the intentions of Napoleon the Little concerning 
Mexico, and with a view of preventing foreign intrusion, 
which was only the entering wedge for future invasion, at a 
time when our nation was engaged in a family struggle to 



46 MORE WAR REMINISCENCES. 

maintain its own existence, and demonstrate the durability 
of Republicanism. 

The dinner, at which there was a grand manifestation of 
sympathy in favor of the Mexican cause against French 
invasion, took place on the evening of March 29, 1864, at 
Delmonico's, Fifth Avenue and Fourteenth street. The 
banquet was held in four of the largest rooms. The large 
dining hall was illuminated as a promenade for the families 
of the hosts and guests, and a large concourse of ladies and 
gentlemen who were invited to see the table and be pre- 
sented to the distinguished envoy. The rooms were 
elegantly decorated with flowers, grouped and festooned 
with artistic skill, and the doorways arrayed with fragrant 
wreaths and garlands. One room was set apart for the 
orchestra, and Helmsmuller furnished the music. 

Senor Don Juan N. Navarro, Consul-General of the Mexi- 
can Eepublic, Ignacio Marescal, an eminent jurist of Mexico, 
and Don Fernando De La Cuesta, Assistant-Secretary of 
the Legation, were invited guests. Following are the names 
of the Committee of Invitation : 

WILLIAM C. BRYANT, GEORGE T. STRONG, 

WILLIAM H. ASPINWALL, HENRY DELAFIELD, 

HAMILTON FISH, HENRY E. P1ERREPONT, 

JOHN W. HAMERSLEY, GEORGE OPDYKE, 

JONATHAN STURGES, DAVID DUDLEY FIELD, 

JAMES W. BEEKMAN, GEORGE BANCROFT, 

J. J. ASTOR, Jb., C. A. BRISTED, 

SMITH CLIFT, ALEXANDER VAN RENSSELAEB, 

W. E. DODGE, Jb., GEORGE FOLSOM, 

DAVID HOADLEY, WASHINGTON HUNT, 

FREDERICK DE PEYSTER, CHARLES KING, 

W. BUTLER DUNCAN, WILLARD PARKER, 

WILLIAM CURTIS NOYES, ADRIAN ISELIN, 

HENRY CLEWS, ROBERT J. LIVINGSTON, 

FREDERICK C. GEBHARD, SAMUEL B. RUGGLES. 

JAMES T. BRADY, 

f 

Hon. James W. Beekman presided. The stewards were 
John Jacob Astor, John W. Hamersley and Henry Clews. 

"When full justice had been done to the large variety of 
sumptuous dishes, the chairman called the company to 
order, and explained that the object of the meeting was \o 



RESISTING FOREIGN INVASION. 47 

do honor to the great cause of religious and political free- 
dom contended for by the Eepublic of Mexico. The chair 
gave the first regular toast, " The President of the United 
States," and called upon David Dudley Field to respond, 
who did so in his usual eloquent style, stating that the sen- 
timent of the whole country was united in sympathy with 
the cause of the Mexicans, and that the Executive Depart- 
ment of the Government was simply the agent and exponent 
of the popular will. ' He dwelt at some length on the French 
invasion of Mexico as one of the greatest crimes of the age, 
and predicted the brief reign of Maximilian. Mr. Field 
wound up his discourse with the following grand perora- 
tion: 

Maximilian may come with the Austrian eagle and the 
French tricolor ; he may come with a hundred ships ; he may 
march on the high road from Yera Cruz to the capital, under 
the escort of French squadrons ; he may be proclaimed by 
French trumpets in all the squares of the chief cities ; but 
he will return, at some earlier or later day, a fugitive from 
the New World back to the Old, from which he came ; his 
followers will be scattered and chased from the land ; the 
titles and dignities which he is about to lavish on parasites 
and apostates will be marks of derision ; the flag of the 
republic will wave from all the peaks of the Cordilleras, 
and be answered from every mountain- top, east and west, to 
either ocean ; and the renewed country, purified by blood 
and fire, will resume its institutions, and be free. 

The second toast was, "Don Benito Juarez, Constitutional 
President of the Mexican Eepublic," to which Mr. Charles 
King, President of Columbia College, responded. He 
spoke of Mexico as the friend and ally of the Union as 
opposed to European hostility. 

His Excellency, Senor Matias Komero, the honored guest 
of the evening, then made a brilliant speech on the situation, 
from which I take the following extracts : 

" I am very happy to say that the kind of feeling you ex- 
press for Mexico is fully reciprocated. In Mexico there 



48 MORE WAR REMINISCENCES. 

are now but the sentiments of regard and admiration for 
the United States, and the desire to pursue such a course as 
will draw more closely all those powerful ties by which both 
nations should be united. 

" The Emperor of the French pretends that the object of 
his interference in Mexican affairs is to prevent the annex- 
ation of Mexico to the United States ; and yet that very 
thiog would, most likely, be ultimately accomplished if a 
monarchy were established in Mexico. Fortunately for us^ 
that scheme is by no means a feasible one. 

'* We were willing to grant to the United States every 
commercial facility that will not be derogatory of our inde- 
pendence and sovereignty. This will give to the United 
States all possible advantages that could be derived from 
annexation, without any of its inconveniences. That once 
done, our common interests, political as well as commercial, 
will give us a common whole American continental policy 
which no European nation would dare disregard. 

'* The bright future which I plainly see for both nations 
had made me forget for a moment the present troubles in 
which they are now involved. I consider these troubles of 
so transitory a nature as not to interfere materially with the 
common destiny I have forshadowed ; but, as they have the 
interest of actuality, I beg to be allowed to make a few 
remarks in regard to them. 

" Every careful observer 01 events could not help noticing, 
when the expedition against Mexico was organized in Europe, 
that it would, sooner or later, draw the United States into 
the most serious complications, and involve them in the 
difficulty. The object of that expedition being no less than 
a direct and armed interference in the political affairs of an 
American nation, with a view to overthrow its republican 
institutions and establish on their ruins a monarchy, with a 
European prince on the throne — the only question to be 
determined by the United States and the other nations 
concerned, was as to the time when they would be willing or 
ready to meet the issue thus boldly and openly held out by 
the antagonistic nations of Europe. 

"This, in my opinion, is the situationin which the United, 
States are placed with regard to Mexico. Taking into con* 
sideration the well-known sagacity of American statesmen 
the often-proved devotion of the American people to 
republican institutions, and the patriotism and zeal of the 



MEXICO'S STRUGGLE FOR FREEDOM. 49 

Administration that presides over the destinies of the 
country, I cannot entertain the slightest doubt that the 
United States will act in this emergency as will conduce to 
the best interests they and mankind at large have at stake 
in the Mexican question. 

4 'The United States may find that they are brought 
squarely to the issue in the Mexican question sooner than 
they expected, should the report, lately reached here, of 
any understanding between Maximilian, as so-called Emperor 
of Mexico, and the insurgents in this country, prove correct. 
The archduke, it is stated, will inaugurate his administra- 
tion by acknowledging the independence of the South, and, 
perhaps, he will go further; and this, of course, by the 
advice, consent and support of the French Government, 
whose satellite, and nothing else, will the archduke be in 
Mexico. 

"Among the many events calculated to terminate imme- 
diately French intervention in Mexico, the European com- 
plications which threaten to cause a general war on that 
continent should be particularly mentioned. It is certainly 
wonderful that while Europe is in so insecure and agitated a 
condition, menanced by revolutions everywhere, and wrest- 
ling to recover its own existence and independence, the 
French Emperor should be thinking about arranging other 
people's affairs, as if his own did not require his immediate 
and most particular attention. 

Mr. George Bancroft, the eminent historian, was next 
called upon to reply to the toast, " The Eminent Statesmen 
of Mexico," among whom the chair named Guatimotzin, 
Hidalgo, Morelos, Ocampo, Lerdo and Degollado. Mr. 
Bancroft said : 

MR. BANCROFT. 

Gentlemen — Although I am not prepared to deliver an 
address worthy of this auditory, I can not refrain from re- 
plying and expressing my sentiments, as I have been called 
to reply to the toast which our president has just proposed 
to the statesmen of our neighboring sister republic. The 
struggle which for many long years the Mexican people 
have sustained against their interior tyrants has been an 
heroic struggle, worthy of a civilized and cultivated peo- 
ple, and in which the sympathies of the whole civilized 



50 MORE WAR REMINISCENCES. 

world — of all the friends of political and religious liberty — 
ought to have been manifested in a frank and decided man- 
ner in behalf of the Mexican people, directed by the liberal 
party. I believe, gentlemen, that the cause of civil wars, 
not only in Mexico, but throughout all Spanish America, has 
been the clergy alone, who, when they come to acquire power 
in the State, always strive to overturn the government and 
to subordinate the temporal interests of society to their own. 
This attribute seems to belong principally to the Catholic 
clergy. 

"The struggle, then, in which up to this time the patriotic 
Mexicans have been engaged, was a holy struggle, and the 
sympathy of the whole people of the United States was with 
them — a people who, whatever may be their religious creeds, 
adopts as a fundamental principle the most complete religious 
liberty, and the absolute independence of the Church from 
the State. 

" But now the sympathy of the United States is increased 
for the Mexican people, when, in addition to the facts al- 
ready mentioned, we find this people struggling for their 
independence and nationality against a European nation, 
which, taking advantage of the civil strife in which we were 
engaged, has sought to establish before our eyes a form of 
government in open antagonism to our own. We can not 
do less than receive this project in the same way as Europe 
would receive it, were we to foment revolutions and estab- 
lish republics on that continent. 

" Then it is that those statesmen in the United States 
who aid us to emerge from our present difficulties, and to 
restore our power and legitimate influence, and those who 
in Mexico not only consummate the great work of establish- 
ing religious liberty on a solid basis, but who succeed in 
driving from their country the foreign invader, or at least 
keep the sacred fire of patriotism and of resistance to the 
invader burning, while we 'disembarrass ourselves of our 
complications, deserve, in the highest degree, our success 
and ardent homage. 

" Gentlemen, the Egyptians used to place a burning lamp 
at the feet of their royal corpses. On descending the steep 
vaults in which the corpses were deposited, the lamp was 
naturally extinguished. 

"Let Europe place at Maximillian's feet the weak lamp 
of monarchial power. It will not burn in the atmosohere 
of our continent. 5 ' 



A POET'S IDEA OF OI<D WORLD BURGLARS. 51 

Mr. "William Cullen Bryant was then called upon, and 
said, in part : 

" We of the United States have constituted ourselves a 
sort of police of the New World. Again and again have 
we warned off the highwaymen and burglars of the Old 
World who stand at the head of its governments, styling 
themselves conquerors. We have said to them, that if they 
attempted to pursue their infamous profession here they 
did it at their peril. But now, when the police is en- 
gaged in a deadly conflict with a band of ruffians, comes 
this Frenchman, knocks down an unoffending bystander, 
takes his watch and purse, strips him of his clothing, and 
makes off with the booty. This act of the French monarch 
is as base, cowardly and unmanly as it is criminal and cruel. 
There is no person, acquainted, even in the slightest degree, 
with the political history of the times, who does not know 
that it would never have been perpetrated had not the 
United States been engaged in an expensive and bloody 
war within their own borders. 

" We thought that we saw the dawn of an era of enlight- 
ened government in the administration of Juarez. That 
dawn has been overcast by the clouds of a tempest wafted 
hither from Europe. May the darkness which has gathered 
over it be of short continuance ; may these clouds soon be 
dispelled by the sunshine of liberty and peace, and Mexico, 
assured of her independence, take the high place which 
belongs to her in the family of nations." (Continued 
applause.) 

Senor Don Ignacio Mariscal responded to "Our Guest 
and the Bar of Mexico." 

Mr. George Folsom, formerly envoy from the United 
States to the Netherlands, responded on behalf of the 
diplomacy, making special reference to Don Jose Lopez 
Uraga, Mexican Minister to Berlin. 

Dr. Willard Parker responded to the health of Dr. Na- 
varro, formerly Chief of the Medical Staff of the Mexican 
Army. 

Mr. George Opdyke responded on behalf of the mer« 
chants. 



52 MORE WAR REMINISCENCES. 

Senor De La Cuesta replied to the Commerce of Mexico. 

Mr. Jonathan Sturges spoke for the fine arts of Mexico. 

Mr. Washington Hunt spoke, protesting strongly against 
the French invasion of Mexico. 

Mr. Frederick De Peyster, President of the New York 
Historical Society, responded on behalf of the historians 
of Mexico. He also made some eloquent remarks on the 
tyranny of French intervention. 

Mr. Henry E. Pierrepont spoke, as the representative of 
Brooklyn, against the French policy in Mexico. 

Mr. Smith Clift responded on behalf of the Bar. 

Mr. Charles Astor Bristed replied on behalf of the Liter- 
ary Men. 

Mr. William E. Dodge, Jr., spoke on behalf of the Young 
Men of America. " The tread of a French invasion," he 
said, " is to them a direct insult, and were our own sad war 
over, I believe there is not a town, or village, or hamlet, 
where a full company would not spring to arms to aid our 
sister republic in her glorious struggle. I give, as a senti- 
ment in which I know all will heartily join, the " Monroe 
Doctrine" — "Americans can never allow the heel of European 
despotism to place its imprint upon the soil of our Western 
continent." 

The Chair then said, " Let us now recognize the services 
of our commissariat, who have so nobly discharged their 
stewardship. I propose the health of the stewards. I beg 
Mr. John W. Hamersley to speak in their behalf." Three 
oheers were then given for the stewards. 

Mr. Hamersley delivered an eloquent address, from which 
I take the following excerpts : 

"It is hardly fair, sir, to call on ns while our hearts are 
beating with fervid thoughts, and your ears ringing with 
burning words. Had this toast been on the programme, 
one of my coadjutors would have prepared an address 
worthy of the compliment and the occasion. This Com- 
mittee was not chosen for their gifts of utterance, but for 



THE FAIR DAUGHTERS OF MEXICO. 53 



% 



those humbler tastes, which only lend a grace to eloquence. 
Our duties are aesthetic, industrial and artistic. We have 
compassed the ends of the earth, the depths of the sea ; we 
have levied contributions on the four winds of heaven, to 
cluster here all that can tempt the appetite, or fascinate the 
ear and eye, and we fancied our mission accomplished. 

"However, there is the post-prandial law ; the despotism 
of the wine cup, to which we all owe allegiance — the only 
despotism which the descendants of the Huguenots, or 
Pilgrim Fathers, will ever tolerate on this continent. We 
are here, sir, in menace to none, but firmly and respectfully, 
in the majesty of manhood, and in consciousness of power, 
to reassert a principle, imbibed with our mother's milk, a 
household word, a dogma of American faith ; but while we 
cordially grasp our neighbor's hand, in the darkest hour of 
her trial, the grasp has due emphasis and significance. 

" With her, we have kindred traditions ; each of us has 
hewn an empire from the wilderness ; each of us has ex- 
pelled the oppressor ; and both of us, with tattered banners 
drenched in the gore of hero martyrs, are now appealing 
from treachery to the God of Battles. 

" We have a common future ; for who can doubt that our 
successes and the death-knell of treason is already rung ? — 
who can doubt that the triumph of our arms will be the 
signal for the eagles of Austerlitz " to change their base," 
from the pyramids of Puebla for their perch on the towers 
of Notre Dame? And permit me here, sir, to express a 
hope, suggested by the season (God grant it may be a 
prophecy), that the Easter chimes of Mexico, of the coming 
year, with the glad tidings of a Saviour risen, shall peal from 
sierra to sierra, from ocean to ocean, with the glad tidings of 
a nation risen, a nation born again. (Cheers.) 

"Sir [to the ChairJ, it is fitting, while the accents of sweet 
music recall tender and happy memories (man, imaged by 
that armed cactus ; woman, by that graceful palm), it is holy 
to consecrate the hour to her who was " last at the cross 
and first at the sepulchre." 1 propose, sir, a toast, to whicii 
your heart's pulse will echo : 

1 The daughters of Mexico — Fair as her sons are brave.' * 

(Enthusiastic and prolonged applause. Music — Viva Be- 
pu&lica.) 



64 MORS WAR REMINISCENCES. 



THE CHAIR. 

"We must not permit the modesty of our banker and 
steward, Mr. Clews, to outweigh our desire to hear from the 
Bourse. 

MB. HENRY CLEWS. 

Mr. President and Gentlemen— Enough has already 
been said, in the speeches made this evening, to indicate 
most conclusively the depth of sympathy which pervades 
this community in behalf of the cause of Mexico, and I rise 
to express my cordial concurrence with the sentiments which 
have been avowed. 

The unanimous and determined voices of this company 
clearly show that public opinion in this country will not 
submit to the encroachments of foreign powers upon any 
portion of the territory of the continent. 

The principles of free republican government are so 
strongly implanted in the hearts of the people both of 
Mexico and the United States, that they will never consent 
to surrender them. 

* Human freedom and the rights of man make common 
cause between Mexico and all other American States. 

"I do not utter these words in prejudice against any 
government. In my judgment, European nations will best 
promote the welfare of their own people by carefully ab- 
staining from all interference with the declared will of those 
who dwell on this continent. 

u The doctrine has been solemnly asserted, and will be 
maintained inviolate against all alliances which seek to im- 
pede the progress of liberal institutions, or to impair the 
strength of governments founded on the rights and intelli- 
gence of the people. 

M This is the doctrine of the United States, and, under the 
shield of its power and influence, the safety, prosperity and 
independence of Mexico will be maintained and made per- 
petual.' ' (Cheers.) 

The meeting then separated, marching out to the inspir- 
ing strains of the Marsellaise. 

A few days after this meeting the House of Bepresenta- 
tives unanimously resolved that the Unked States would 
never consent to the establishment of a monarchy which 
would arise unaer the auspices of Europe, upon the ruins of 
a republic on the American continent. 



RINGING MAXIMILIAN'S DEATH KNEW,.' 55 

The speeches at the Komero banquet, followed by this 
resolution, were the premonitory sounds of the death knell 
of Maximilian's empire, even before he took formal posses- 
sion of his evanescent throne. 

To show the animus of the Emperor regarding this meet- 
ing, and how closely he was watching the struggle, I may 
state that when the New York Herald, which had a full 
account of the meeting, arrived in Paris it was promptly 
seized by Napoleon's censors and shared the fate of La 
Lantern and some of Victor Hugo's most vigorous produc- 
tions. It was committed to the flames on account of the 
speeches made by some of our representative men. It will 
be seen by reference to this incident that our representatives 
in Wall Street were among the first to perceive this threat- 
ened danger to the nation, and that they manifested their 
business tact and capacity in promptly meeting it. They 
acted literally on the maxim of Sir Boyle Eoche, that " the 
best way to shun danger is to meet it half way." 

Wall Street men were the first to make the move that 
checkmated the tyrant who was ambitious to prove before 
the eyes of the world that Eepublicanism was a failure. 

A volume might be written by the student of universal 
history, and probably will be by some future Herodotus, 
Macaulay, or Prescott, on the far-reaching influences of this 
original move on the part of the Wall Street men. There 
is a large field for speculative theorizing, containing much 
important truth in the way the Eepublican spirit was re- 
flected in the political thought of Mexico, as the result of 
the feeling manifested at this public dinner in New York. 
It was undoubtedly the active precursor of the events that 
sealed the fate of that unfortunate cat's paw, Maximillian. It 
gave birth to the idea that reverberated across the Atlantic, 
created distrust in Napoleon's schemes of conquest as vision- 
ary with his own people, and alarmed their Teutonic foes, who 
urged forward those mighty preparations that culminated m 
the terrible overthrow at Sedan* 



56 MORE WAR REMINISCENCES. 

To the mere reader of our local newspapers the connec- 
tion between cause and effect of these great events may seem 
far-fetched, but it is all plain sailing to the student of gen- 
eral history. 

In this connection it would be unjust to the genius of 
history to omit the part which England played on the same 
chessboard with?her former political refugee, constable and 
Imperial protege. Although Mr. Disraeli has done consid- 
erable justice to the case in Endymion, he has not dealt 
with it from this side of the Atlantic. And I am now going 
to touch on some points of hitherto unwritten history. 

There was a secret alliance formed between Napoleon and 
the British Cabinet— an international conspiracy on a large 
scale— to demolish the liberties of this country,pounce upon 
the wreck and then share the spoils between these two 
powerful pirates. How this was planned and subsequently 
averted would form, if fully written up, one of the most 
interesting chapters in the voluminous library of statecraft, 
and would take most of the political sensation out of the 
best efforts of Macchiavelli, Tallyrand and Prince Metter- 
nich. I can only glance at the leading features of the 
diabolical scheme, and show how Wall Street men were 
again promptly in the breach at the proper moment. 

The New York riots of 1863 were fomented by British, 
French and Southern influence combined, as a part of the 
villainous plot. The design was to give our troops enough 
to do in quelling local riots, so that they should have no 
opportunity of going to the front. Southern passion was 
predominant, and could not discern at the time that their 
would-be allies were their bitterest enemies. It was hoped 
that the "draft riots" would be so widespread as to afford 
Southern chivalry a chance to march unimpeded to Wash- 
ington and capture the Capitol, when the allied foes of 
liberty, by virtue of their entente cordiale, should seize upon 
their prey. 

Everything was in readiness for raising the blockade 



EUROPEAN INVADERS FRUSTRATED. 57 

and pouring in armaments from Europe to complete the 
conquest. England had acted with more caution than Na- 
poleon, and was slow to move, though he was constantly 
urging her forward. It is due to the villainy of his great 
conception to state, that, had he been able to move his more 
sluggish ally in crime with greater celerity, the result might 
have been overwhelmingly disastrous to this country 



OHAPTEE VIII. 

FOREIGN INTRIGUES AGAINST AMERICAN LIBERTY. 

(How the Imperial Pirates of France and England Were 
Frightened Off Through the Diplomacy of Seward. 
— Ominous Appearance of the Kussian Fleet in 
American Waters. — Napoleon Aims at the Creation 
of an Empire West of the Mississippi, and the Res- 
toration of the old french colonies. — plotting 
With Slidell, Benjamin, Lindsay, Roebuck and 
Others. — Urging England to Recognize the Con- 
federacy. — Disraeli Explains England's Designs and 
Diplomacy. — After the Naval Victory of Farragut, 
and the Capture of New Orleans England Hesi- 
tates Through Fear, and Napoleon Changes His 
Tactics — Renewal of Intrigues Between England 
and France.— Their Dastardly Purposes Defeated 
by the Victories of Gettysburg, Vicksburg^ and the 
General Triumph of the Union Arms. 

WHILE the events related in the previous chapter were 
progressing apparently towards a result that might 
have proved disastrous to the dearly purchased liberties of 
this country, the nation was saved by taking advantage of a 
circumstance that was peculiarly providential to the Union. 
The Russian fleet happened to be in South American waters 
at the time. Secretary Seward was apprised of the fact by a 
Wall Street man. He was quick to act on the suggestion. 
Alexis, the brother of the Emperor, was in command of the 
fleet. Seward sent him a friendly invitation, which he in- 
stantly accepted. The spies of Napoleon and of Scotland 
Yard, who were always on the alert, and who always discerned 
the evil side of everything, promptly informed their em- 
ployers of the fact. The conclusion was manifest to 
European statesmen, who, unlike Wall Street men, never 
"copper" the points given by spies. It seemed to them 
clearly an alliance between the Great Empire and the Great 
Republic. Extremes had met for mutual defence and safety 



60 FOREIGN INTRIGUES AGAINST AMERICAN LIBERTY, 

probably for aggressive purposes. The conspirators were 
frightened with their own shadows and foiled by their own 
cowardice, and an apparently imminent calamity was thus 
simply averted. 

As the designs of the two great European powers were 
craftily concealed through their evasive system of diplom- 
acy, it has frequently been a subject of debate as to 
whether they meant to take the part of the Confederacy for 
the purpose of dissolving the Union. It is necessary, there- 
fore, to produce some tangible evidence of the intentions of 
these foreign potentates in the hour of our country's 
greatest peril. 

The Confederate records purchased by the Government 
some years ago throw a ghastly light on this subject, and 
gravely warn us of the Scriptural injunction, to put no trust 
in kings and rulers. 

The correspondence between the officials of the Con- 
federacy and the Confederate Commissioners, Slidell and 
Mason, at Paris and London, prove to a demonstration that 
the ruler of France and the rulers of Great Britain were 
making preparations on a large scale to take charge of this 
country as soon as the Union, through their diplomatic aid, 
should be dissolved. Letters from other representatives of 
the Confederates of Europe go to corroborate this view of 
the matter. The correspondence between Dudley, Post, 
Mann and Lamar, who were commissioners in various parts 
of Europe, and Judah P. Benjamin, the Confederate Secre- 
tary of State, is conclusive on the subject of European 
armed intervention, which has hitherto formed a topic of dis- 
pute in the historic circles of the Civil War. 

The correspondence of Slidell, who was on familiar 
relations with the Emperor of the French, gives the inside 
history of the intrigues of that potentate in such clear terms, 
that there can be no doubt of his intentions towards this 
country. 

Had it not been for the superior vigilance of Mr. Dayton, 



KING COTTON A POWER IN DIPLOMACY. 6l 

the United States Minister at Paris, several privateers would 
have been launched from French ports to prey upon the 
commerce of the United States, and to do similar work to 
that for which the Alabama was fitted out. 

It would seem from the correspondence that the managers 
of the affairs of Great Britain were not so anxious to en- 
courage the South as Napoleon was ; at least they succeeded 
in concealing their purpose better. The practical diplo- 
macy of England in this affair was superior to that of 
France, though the latter has still held the palm for pos- 
sessing better diplomatic plotters, who are supposed to have 
no superiors outside the royal associations of the reigning 
power of Kussia. 

There is no doubt, however 9 that Napoleon was anxious 
to take positive steps to recognize the South, while profess- 
ing the most friendly feelings in favor of the North, but he 
was afraid to act except in unison with Great Britain, and 
he failed to bring her to time until the favorable moment 
for the execution of his plans had passed. 

Slidell and Mason went to Europe in January, 1862. 
This was perhaps the darkest and most critical period for 
the cause of the Union during the great struggle. The 
Commissioners carried letters with them showing the ineffi- 
ciency of the blockade of the Southern ports, the great dis- 
advantages and losses suffered by England and France 
through cutting off the cotton supplies, and setting forth 
the enormous advantages that would result if free trade with 
the Confederacy were established. These were strong 
arguments to arouse the spirit of commercial selfishness in 
favor of the South. 

The ambitious designs of Napoleon were of a very tower- 
ing and extensive character. He not only expected to re- 
cover Louisiana, which his uncle in an hour of necessity 
had sold to the United States, but he aimed at the restora- 
tion of the entire old colonial empire of France on this 
continent. 



62 FOREIGN INTRIGUES AGAINST AMERICAN LIBERTY. 

The Emperor was thoroughly posted in the affairs of this 
country. It seems that while he had resided in a small room 
in Hoboken, and took his meals at a twenty-five cent restau- 
rant, paying for them with money borrowed from French 
patriots, on the very slim prospect of reaching the throne of 
France, he made the best use of his time, and he had studied 
the history and geography of the United States and Canada 
with great care and accuracy. 

In justice to his character for gratitude, however, it must 
be said, in passing, that, like young " Corneel" Vanderbilt, 
he paid all the money he borrowed, and placed some of his 
New York and Hoboken creditors in good positions at the 
Tuilleries, under the Second Empire. He never forgot a 
favor nor forgave an injury. 

The Emperor's knowledge of American affairs, as well as 
his ambitious designs, were briefly, but at the same time 
very fully disclosed, in conversation with Mr. Benjamin, at 
the "Villa Eugenie, at Biarritz. " He turned with peculiar 
and undisguised eagerness," said Mr. Benjamin, "to the 
Mexican question. He knew the very number of guns on the 
Morro, the sums the United States had spent on the fortifi- 
cations in Florida, the exports and imports of Galveston 
and Matamoras, in fact everything which well informed 
local agents could have reported to an experienced states- 
man eager for information. He examined me again on 
Texas and its population, the disposition of the French 
residents, the tendencies Of the German colonists, the feeling 
on the Mexican frontier. He observed that Louisiana was 
nothing but French at the bottom. I was fully persuaded 
that he proposed to seek in Mexico a compensation for the 
lost colonies in the West Indies, which, he said, could not be 
recovered, ' sans nous br outlier avec nos allies,' (without em- 
broiling us with our allies). He insisted upon it that France 
must, sooner or later, have a foot-hold (pied a terre) on the 
Florida coast, for the purpose of protecting her commerce 
in the Gulf, for, he added, ' Nous ne voulons pas oVun autre 



WANTED — AN AU<Y IN CRIME. 63 

Gibraltar de ce cote Zd,' (we don't want another Gibraltar on 
that side.") 

Mr. Slidel's predecessor at Paris, Mr. Rost, had received 
assurance from the Due de Morny, who was then next to the 
Emperor in his knowledge of State affairs, that the South 
would be recognized. It was only a question of time. After 
consulting with M. Thouvenel, Minister of Foreign Affairs ; 
Persigny, Minister of the Interior; Fould, Minister of 
Finance ; Kouher, Minister of Commerce ; Baroche, Presi- 
dent of the Council of State ; Mocquard, Private Secretary 
of the Emperor ; Count Walewski, De Morny and others, 
Slidell was satisfied that the Emperor was all right, and 
he wrote to Jeff. Davis & Co. as follows : 

" The Emperor has invited the English Government to 
join with him in recognizing the South, but the English 
Government, owing to Earl Russell, has refused to act 
simultaneously with him." 

This statement of Slidell was true in one sense, but it 
was not strictly and diplomatically correct. There is no 
doubt that the English Government would have been anx- 
ious enough to join the Emperor in any scheme of conquest 
and spoliation that had a fair promise of success, and an 
average chance of avenging the Boston Tea Party and the 
Battle of Bunker Hill, but both powers were playing at the 
game of diplomacy, each for the purpose of making the 
other responsible for taking the initiative in the recognition 
of the South. They were both very circumspect about com- 
mitting themselves, and the Palmerston-Russell Cabinet, 
with that caution which always characterized old " Pam" 
in foreign affairs, would not recognize any suggestion from 
the Emperor that did not bear his signature. The Emperor 
thought to make use of a Mr. Lindsay, a wealthy shipowner 
and member of Parliament, to draw out the English Gov- 
ernment, but the latter was not to be committed to any 
course of policy that might involve important responsibili- 
ties in the future through any second-hand authority. 



64 FOREIGN INTRIGUES AGAINST AMERICAN LIBERTY. 

The Emperor seemed to have opened his mind very 
freely to Mr. Lindsay. He told him that he would have 
taken steps to put an end to the blockade of the Southern 
ports if the English Ministry had intimated a willingness 
to act with him. He said he had forwarded intimation to 
this effect through Mr. Thouvenel, but had not received a 
satisfactory answer. He intimated that if England was 
ready, he was, and was prepared at once to despatch a form- 
idable fleet to the Mississippi, on condition that England 
should send an equal force to demand free ingress and egress 
for their merchantmen, and for the cargoes of goods and sup- 
plies of cotton which were necessary to carry on the com- 
merce of the world. 

Napoleon was resolved to act, as he had always done, on 
the high ground of conferring universal favors on humanity. 

This was an old trick in his family, but it did not work 
effectually this time. He said he had regarded the restora- 
tion of the Union impossible from the first, and for that rea- 
son had deprecated the continuance of the bloody contest, 
which could not lead to any other result than separation. 
He authorized Mr. Lindsay to make this statement to Lord 
Cowley, and to ascertain whether he would recommend the 
course indicated to his Government. 

It is very refreshing to reflect on the sensitive exhibition 
of feeling displayed, in his ostensible attempt to stop the 
carnage and fratricidal strife, by the man who planned and 
directed the wholesale assassinations in connection with the 
sanguinary Coup oVEtat. 

Mr. Lindsay reported back to the Emperor the substance 
of his interview with Lord Cowley, who said that the Eng- 
lish Government was not prepared to act until further de- 
velopments. It was about this time that Mr. Seward was 
getting in his fine diplomatic work with Earl Kussell and 
Palmerston, which helped materially to upset the calcula- 
tions of the Emperor. 

Napoleon then requested Mr. Lindsay to see Palmerston, 



DISRAELI DESCANTS ON ENGLISH DUPLICITY. 65 

Eussell, Derby and Mr. Disraeli, and to gather their inten- 
tions. He desired Mr. Lindsay to do all this of his own 
motion, and not as coming from him, and said he did not 
wish to be embarrassed by the forms and delays of ordinary 
diplomacy, because he felt the necessity of immediate action. 

Lindsay again saw Earl Eussell, as the accredited and 
special ambassador of the Emperor, viva voce. The Earl 
informed him that he could not receive any communications 
from a foreign power, except through the regular diplomatic 
channel. He then sought an interview with Mr. Disraeli, 
who was much more affable and communicative than the 
little Lord who stood so punctiliously on ministerial cere- 
mony. 

Disraeli threw considerable light on the subject. After 
expressing a deep interest in the affairs of the Confederacy, 
and saying that he fully concurred in the views of the 
Emperor, he told Mr. Lindsay that he had good reasons for 
believing that a secret understanding existed between Earl 
Eussell and Mr. Seward ; that England, in the meantime, 
would respect the Federal blockade and withhold recogni- 
tion of the South. " But if France should take the initia- 
tive," said Mr. Disraeli in conclusion, "any course she 
may adopt to put an end to the present state of affairs will 
undoubtedly be supported by a large majority in Parliament, 
and knowing this, Lord Eussell will give a reluctant assent 
to this, to avoid a change of ministry, which would otherwise 
certainly follow." 

This shows that Disraeli saw very clearly through the 
duplicity of English diplomacy, and that while England was 
profuse in her promises to Mr. Seward, she was only waiting 
for the Emperor to act as pioneer in order that she might 
have a safe opportunity as well as a plausible pretext for 
armed intervention. 

The Emperor complained that Earl Eussell had divulged 
his views on American affairs, as expressed through his 
ambassador, to Mr. Seward. Lord Eussell placed himself 



66 FOREIGN INTRIGUES AGAINST AMERICAN UBERTY. 

squarely on the " fence," to be prepared for any emergency. 
Finally, about the middle of April, the Emperor thought it 
would be best that he himself should make a friendly appeal 
to the Federal Government, alone to open the ports, if Eng- 
land did not join him, without further hesitation. He thought 
it would be necessary, however, to accompany the appeal with 
a demonstration of force on the Southern coasts ; and if the 
appeal should be effective, to back it up by a declaration of 
his purpose not to respect the blockade. He determined, 
however., to wait a few days longer to see how England 
would act. 

This resolution of the Emperor to make a friendly appeal 
to raise the blockade was only a thin excuse to find a cause 
for quarrel with the North, and it is very probable he would 
have acted on this determination alone, but for an unexpec- 
ted event which changed his projects, and the apparent 
course of history. 

About a week after this diplomatic conference, Commo-r 
dores D. G. Farragut, and D. D. Porter, with their able 
commanders Bailey and Bell, had made the famous passage 
of forts Jackson and St. Philip, at the mouth of the Missis- 
sippi, with the United States squadron, silenced the Chal- 
mette batteries and anchored in the harbor of New Orleans. 
After two days' parleying the city surrendered at discretion, 
or rather, the city authorities passively and sullenly per- 
mitted Farragut, and afterwards General Butler, to take 
possession of the city without shedding any blood. 

This great naval victory of Farragut' s squadron and its 
consequences dampened the ardor of the Emperor. He saw 
the chances of backing up his " friendly appeal " by a dem- 
onstration of force, were cut off, so far as New Orleans and 
the for fc ts of the Mississippi were concerned. 

Yet, Napoleon did not totally relinquish the enterprise, 
on account of this crushing defeat of the Confederacy. M. 
Billault, a prominent member of Napoleon's cabinet, after 
this event said to Slidell, " The cabinet, with the probable 



A DELUSIVE DREAM OF POWER AND PRESTIGE. 67 

exception of M. Thouvenel, are in favor of the South. If 
New Orleans had not fallen, our recognition could not have 
been long delayed, but if the Confederates should obtain 
successes in Virginia and Tennessee, and hold the enemy at 
bay a month or two longer, we may see an opportunity for 
intervention." 

The Emperor's intentions, however, were fully revealed 
in an autograph letter to General Forey, which was written 
in July and in which his grasping ambition stood out in the 
boldest relief. He wrote : " In the present state of civili- 
zation of the world, the prosperity of America is not a 
subject of indifference to Europe, for she nourishes our 
manufactures and gives life to our commerce. We are 
interested in having the Eepublic of the United States a 
powerful and prosperous power, but we are not willing to 
have that Eepublic take possession of the entire Gulf of 
Mexico, command from there the Antilles as well as South 
America, and monopolize the distribution of the products of 
the New World. To prevent this, a stable Government must 
be established in Mexico, and we will in that event have 
restored to the Latin race on the other side of the Atlantic 
its power and prestige." 

Napoleon completely overdid the thing in this letter to 
General Forey. The vaulting ambition which overleaps 
itself and falls on the other side stuck out too plainly. He 
showed that he wanted the whole earth, and this aroused 
the resentment of the South. In the following August, M. 
Theron, a French consul in Texas, inspired by Napoleonic 
ideas of annexation, coolly contemplated the transformation 
of Texas to a French republic, and confided his project to 
Governor Lubbock of that State, who apprised Jefferson 
Davis of the consul's aspirations. This was too much even for 
the Confederate Government, and M. Theron and the French 
consul at Eichmond were both politely requested to leave 
the Confederate States. 

Napoleon persisted in his intrigues for the purpose of 



68 FOREIGN INTRIGUES AGAINST AMERICAN UBERTY. 

getting a foothold in this country, in spite of the rebuff 
which his officious consuls had received from the Confeder- 
acy. He expressed himself desirous of interesting some of 
the rest of the European powers in the cause of the South, 
and again entered into confidence with Slidell on the possi- 
bility of joint mediation on the part of England, France 
and Eussia. "My own preference," said the Emperor, "is 
for a proposition for an armistice for six months, with the 
Southern ports open to the commerce of the world. This 
would put a stop to the effusion of blood " (How tender- 
hearted he was !) " and hostilities would probably never be 
resumed. We can urge it," he added, " on the high grounds 
of humanity, and the interests of the whole civilized world. 
If it be refused by the North, it will afford good reason for 
recognition, and perhaps for more active intervention." 

Mr. Slidell then suggested that if the Emperor would give 
some kind of assurance that the police would not interfere, 
ships and munitions of war might be sent from France to 
the Confederacy. 

" Why could you not have the ships built as if for the 
Italian Government ?" suggested the Emperor. " I do not 
think it would be difficult, but I will consult my ministers 
about it." 

Napoleon then suggested the joint appeal for the six 
months' armistice to England and Eussia, which was de- 
clined by both. He then made a direct offer of mediation 
to the United States Government, in the most friendly terms, 
and on the "high grounds of humanity." 

The United States Government did not see it in this 
light, and rejected Napoleon's humane offer. 

The Confederate agents then obtained power to build 
ships of war in French ports, and to arm and equip them, 
and proceed to sea without molestation from the French 
authorities, the Treaty of Paris forbidding such a hostile 
act against a friendly power like the North to the contrary 
notwithstanding. The despot of France imagined himself 
above all treaties at that time. 



ENGLAND "CRAWLS" OUT OF THE SCRAPE. 69 

The English Alabama was then cruising in a most suc- 
cessful manner. The Emperor had a conference with Mr. 
Arman, a large shipbuilder, and assured him that there would 
be no difficulty about building the ships for the Confederates 
under the disguise of their Italian destination. Accord- 
ingly, a contract was made for building five ships of war at 
Bordeaux and Nantes, and afterwards another contract for 
three iron-clad rams. 

In 1863 the Emperor had a great deal of business on 
hand, but was still convinced, amid all his diplomatic duties 
that the South should be recognized by the European 
powers. He was afraid, however, of putting his Mexican 
expedition in jeopardy by risking a rupture with the North. 
Finally, he said : " I will make a direct proposition to 
England for joint recognition. This will effectually prevent 
Lord Palmerston from misrepresenting my position and 
wishes on the American question.'' Accordingly, he had an 
interview with those two worthy members of Parliament, 
Messrs. Roebuck and Lindsay, at Fontainbleau, which was 
said to be highly satisfactory. He authorized them to state 
in the House of Commons that he was both willing and 
anxious to recognize the Confederate States, with the co- 
operation of England. 

There was a great debate in Parliament on the subject, 
in the midst of which Earl Eussell arose and said that 
Baron Gros, the French Minister, had received no commu- 
nication from his Government on American affairs. Mr. 
Eoebuck, who made the motion on the authority of the 
Emperor, was astonished that he had been so badly fooled. 
It still remains a mystery, however, why Baron Gros did 
not receive the advice in question from the Emperor, be- 
cause M. Mocquard, the Emperor's Secretary, wrote to 
Slidell as follows : "On the next day after the interview 
of Messrs. Eoebuck and Lindsay with the Emperor, the 
Minister of Foreign Affairs telegraphed Baron Gros to 
'officiously' inform Lord Palmerston that, should Great 



70 FOREIGN INTRIGUES AGAINST AMERICAN LIBERTY. 

Britain be willing to recognize the South, the Emperor 
would be willing to follow her in that way." 

The only explanation that seems plausible under these 
circumstances is, that the Palmerston-Eussell Cabinet in- 
terrupted this telegram to Baron Gros for diplomatic pur- 
poses, or that the Baron, seeing that the debate in Parliament 
had taken an unfavorable turn, had prudently resolved to 
suppress the advice from Napoleon, in order that his master 
might not commit himself while England was not heart and 
soul with him in the enterprise. ) In fact, England had 
begun to see that she had taken a false position, and Mr. 
Gladstone's eloquent spurt, to the effect that " Jefferson 
Davis had created a nation," was no longer the diplomatic 
faith of England. She was more influenced by fear than 
love, as she always is, and had begun to think, after the 
capture of New Orleans and the destruction of the Con- 
federate fleet, that the Federal Government was capable of 
organizing a formidable navy. The London Times, which 
voiced diplomatic sentiment then, said so. During this very 
debate on Boebuck's motion, Lee's army had been beaten at 
Gettysburg, Yicksburg had surrendered and victory was 
beginning to perch on the Northern banners everywhere. 
Napoleon also drew in his horns, complaining bitterly that 
"perfidious Albion" had gone back on him, and he was 
afraid to permit the war ships, when finished, to leave the 
French ports for any destination, and when he permitted 
the English privateer, the Bappahannock, to depart, it was 
under the injunction that the American minister should 
know nothing about it. 

What Lord Palmerston called a "concatenation of cir- 
cumstances '' contributed largely to force the Emperor to 
change his policy towards the United States. Maximilian's 
Mexican expedition was exceedingly unpopular, trouble was 
brewing in several parts of the continent, and Bismarck 
and Yon Moltke were cunningly and deliberately weaving 
that net in which the Man of Destiny, seven years later, was 



HOW A DAY DREAM OF EMPIRE ENDED. 71 

Hopelessly entangled at Sedan. His dream of a French. 
American Empire beyond the Mississippi had vanished long 
before his last abject act of humiliation in surrendering the 
sword of France to Bismarck. And ere he died, a miserable 
wreck of disappointed ambition, again a political exile, he 
had the opportunity of seeing our own Kepublic, which he 
sought to destroy, rehabilitated, and on its way to become 
the greatest nation in history. 




THE HON. JOHN SHERMAN, 

Who has taken a prominent part in financial matters 
since the beginning of the war, first in making 
treasury notes a legal tender in 1862; in proposing the 
Redemption Act in 1867, which was passed in 1870, 
and in the resumption of specie payments in 1879, 
which was the crowning success of the financial policy 
which established the Government credit on a solid 
basis. 



CHAPTEB IX. 

SECRETARY CHASE AND THE TREASURY. 

The Depleted Condition op the Treasury when Mr. 
Chase took Office. — Preparations for War and 
Great Excitement in Washington — Chivalrous 
Southerners in a Ferment.— Officials Up in Arms in 
Defence of their Menaced Positions. — Miscalcula- 
tion with Eegard to the Probable Duration of the 
War.— A Visit to Washington and an Interview with 
Secretary Chase.— Disappointment about the Sale 
of Government Bonds. — A Panic Precipitated in 
Wall Street. — Millionaires Reduced to Indigence 
in a Few Hours.— Miraculously Saved from the 
Wreck. — How it Happened. 

SOON after Mr. Chase came into the Treasury he found 
that money was seriously needed. In fact the Treasury 
was empty. The expenditure for the fiscal year ending 
June, 1861, was 62 millions, and there were only 41 millions 
of revenue to meet them, and even this amount was threat- 
ened with a serious reduction on account of the traitorous 
and rebellious attitude of the South. 

After President Lincoln had called upon Congress to pro- 
vide for the enlistment of 400,000 men, the expenses of the 
Government were soon advanced to the enormous amount of 
a million dollars a day. The Secretary of the Treasury made 
a calculation, which he submitted to the President, showing 
that the probable expenditures would amount to 318 mil- 
lions for the ensuing year. He advised that 80 millions be 
provided for by taxation, 240 millions by loan, and that 50 
millions of Treasury notes, redeemable in coin on demand, 
should be issued. 

The Secretary was authorized by Congress to borrow a 
sum not exceeding 250 millions, on the credit of the United 
States, and as a part of this loan he was, in the words of the 



74 SECRETARY CHASE AND THE TREASURY. 

Act, u to issue in exchange for coin, or pay for salaries or 
other dues from the United States, not oyer 50 millions of 
Treasury notes, bearing no interest, but payable on demand 
at New York, Philadelphia or Boston." 

When Mr. Chase advertised for bids on the bonds known 
as the 81 issue all bids at 94 and above were accepted, and 
those under 94 were rejected. 

I got up a syndicate immediately to take the entire bal- 
ance of the loan at 94, and went on to Washington to see 
the Secretary. This syndicate comprised a number of New 
York banks and many large capitalists. I called upon Sec- 
retary Chase when I arrived, informed him of the object of 
my visit and made him an offer of 94 for the entire balance 
of the loan. 

He was in favor of the proposition, but requested me to 
leave the matter open until the following morning for him 
to consider. It was a question with him whether he ought 
not to give those whose bids had been rejected an equal 
opportunity with the parties I represented. 

I never can forget the impression I received on my ap- 
proach to Washington that morning. As I looked through 
the window of the sleeping-car my eye was met by an entire 
train load of brass cannon. There were at least a dozen 
platform cars, each having one of those huge guns, all 
apparently in order to wheel at once against the enemy. I 
shall always remember the feelings that came over me at 
that moment. The question of war or no war was vividly 
presented to my mind, and this was the uppermost thought 
during my visit at Washington. 

I descended from my traveling quarters as soon as the 
train was announced as having arrived at the capital, and 
repaired to Willard's, then the principal, if not, in fact, the 
only hotel for a traveler to go to, and it was an old-fash- 
ioned, historic hostelry. I hastened to my room, rapidly 
performed my ablutions, and then found my way into the 
dingy breakfast room. On inquiry, I found that ten o'clock 



DISTINGUISHED BEARING OF CHASE. 75 

was the usual hour for heads of departments, including Mr. 
Chase, to be at the Treasury. At that hour I went to see 
him. I sent in my card and was ushered into his presence 
without delay. He was a man of portly frame and distin- 
guished bearing, and impressed me with the feeling of be- 
ing in the presence of an individual far above the average 
standard of humanity in every respect. 

I informed the Secretary of my mission* with the result 
above stated. 

About seven-eighths of the people of Washington, at that 
time, were Southerners. The office-holders were largely com- 
posed of the latter, and they were expecting to be suddenly 
turned out of office. This rendered the place a boiling 
caldron of conspiracy and treason. 

As I went around collecting information, the sight of 
those cannon that at first had made such an indescribable 
impression upon me, continued to haunt my vision wherever 
I went. The air was filled with rumors of war, and every- 
body was wound up to the highest pitch of hostile excite- 
ment. 

As I mingled among the people, the impression was forced 
upon me that war was inevitable, and that up to the very 
hilt of the sword. I felt that the contest would be long and 
bloody. 

I sent a dispatch to my firm in New York, conveying my 
impressions to that effect, and advised them to clear the 
decks in preparation therefor. I urged them to lose no time 
in selling off all the mercantile paper on hand, and requested 
them to communicate to the members of the syndicate, 
which I had formed for the purchase of bonds, recommend- 
ing them to withdraw therefrom, as I was convinced that 
war to the knife was imminent, and that Government bonds 
must have a serious fall in price in consequence. 

I saw Mr. Chase the next morning, and told him that, as I 
believed, there was going to be a long and bloody war, 
I could not conscientiously, in the interest of my clients, 
renew my bid of the previous day. 



78 SECRETARY CHASE AND THE TREASURY. 

With regard to my opinion about the probable length of 
the war, the Secretary took issue with me very firmly. 

Mr. Chase, however, afterwards proved to be a warm and 
most valued friend of mine, and it was largely due to his 
aid and recognition that I achieved brilliant success in my 
early Wall Street career during the war period. 

The Secretary was of opinion that the bonds should com- 
mand par, at least, and they would be worth that and above 
it very soon, he thought. He made this assertion on the 
expectation that the impending difficulties would soon be 
adjusted, and that in less than sixty days all the trouble 
would be at an end. 

It was not so extraordinary as it may seem to some people 
now, with the light of later events fully before them, that the 
Secretary was so sanguine of short work being made of the 
South, because he only shared the opinion of a large number 
of people, who greatly underestimated Southern durability. 

After leaving the Secretary, who treated me with great 
consideration, as he did every one in his inimitable and dig- 
nified manner, which made such a durable and favorable 
impression on all who came in contact with him, I felt great- 
ly pleased and highly gratified at meeting him. In fact, his 
fine, magnetic presence was of a character to command the 
admiration of almost every person who had the honor of an 
interview. He was a great man for producing good first im- 
pressions, and, unlike many impressions of this character 
they were generally lasting. 

Had 1 not visited Washington at the time I did, and had 
I not obtained the correct impression concerning the future 
of the then impending difficulties, my firm, like many others 
that invested in Government bonds, mercantile paper, stocks 
and other fluctuating properties, would have been irretriev- 
ably ruined. I have reason to congratulate myself, there- 
fore, on my good fortune in narrowly escaping such a dis- 
aster, almost at the beginning of my Wall Street career, as 
I was thus enabled, at a later stage of the national trouble, 



FIRST EXPERIENCE IN GOVERNMENT BONDS. 77 

to be of considerable service to the Government, through 
the Treasury, in its efforts to sustain such an army in the 
field as was calculated to ensure success to the Federal 
arms. ^ 

. My first experience in dealing in Government bonds was 
just prior to the Lincoln administration, when Mr. Cobb 
was Secretary of the Treasury. He advertised for sale to 
the highest bidders an issue of U. S. bonds bearing five 
per cent, interest, having twenty years to run, and my firm 
bid for $200,000 of them, hoping to make a quick turn, and 
a small profit thereon. A five per cent, deposit was made, 
as required by custom. 

The loan was all awarded to most of the bids, mine in- 
cluded, and a very large part of it was awarded to Lock- 
wood & Co., who were then regarded the largest and most 
prosperous Stock Exchange firm in the street. 

George S. Bobbins & Co., John Thompson, Marie & Kans, 
and a few others, whose names I now forget, made also 
large bids. 

Of those mentioned, however, my firm stood alone in tak- 
ing up the bonds, as the threatening aspect of political affairs 
came on so soon afterwards as to depreciate Government se- 
curities. The original deposit of five per cent, was lost by 
these subscribers, and the bonds were permitted to remain 
in statu quo, as the Government never forced the claim 
against the delinquents. 

This, in a large measure, accounted for the impoverished 
condition of the Treasury when Mr. Chase took charge of 
it, and for which Mr. Cobb has been made an object, not 
wholly undeserving, of public reproach. 

The $200,000 bonds my firm subscribed for at par 
were sold mostly at 95 and below, but the fact of taking 
Hiem, and meeting the subscription, without fail, gave my 
firm an excellent standing with the Government at the be- 
ginning of the war, and enured greatly to my firm's advan- 
tage thereafter. 



78 SECRETARY CHASE AND THE TREASURY. 

At the time I visited Washington my firm was more large- 
ly engaged in dealing in mercantile paper than any other 
branch of Wall Street business. 

I had inaugurated the system at the time of my advent to 
the u Street " of buying merchants' acceptances and receiv- 
ables out and out, the rate being governed by the prevailing 
ruling rate for money, with the usual commission added. 

It was by this method that my firm soon became the lar- 
gest dealers in mercantile paper, which business had former- 
ly been controlled by two other firms for at least a quarter 
of a century, and whose old fogy methods were by my in- 
novations easily eclipsed. 

The merchants at that time would go to these discount 
firms and leave their receivables, bearing their endorse- 
ments, on sale there, and only when sold by piecemeal could 
they obtain the avails thereof. 

The more expeditious plan that I adopted, which was to 
give these negotiators a check at sight, seemed generally to 
merit their approbation, and enabled me to command the 
situation in that line of business, very much to the chagrin 
of my competitors. 

In this way my firm had accumulated about five hundred 
thousand dollars in notes, which were hypothecated with 
various city and country banks. 

After coming to the conclusion above referred to on my 
visit to Washington, in regard to the certainty of a pro- 
longed and desperate war, I made quick steps back to New 
York to dispose of my paper. I went vigorously to work, 
and succeeded in unloading all but ten thousand dollars of 
short time notes made by Lane, Boyce & Co., and a note of 
$500 of Edward Lambert & Co. 

I had no sooner accomplished this very desirable work of 
shifting my burden, and distributing it in a more equable man- 
ner on the shoulders of others, but at higher rates than I 
paid, than in less than a week after my return from Wash- 
ington the exciting news arrived of the firing of the first 
hostile gun at Fort Sumter. 



FINANCIALLY SAVED BY INSPIRATION. 79 

The announcement of this overt act of war spread like 
wildfire, and the wildest scenes of excitement and conster- 
nation were witnessed in Wall Street and throughout the 
entire business community. The whole country was panic 
stricken in an instant. 

Stocks went down with a bound to panic prices. Fortunes 
were lost, and millionaires were reduced to indigence in a 
few hours. Money was unobtainable, and distrust every- 
where was prevalent. 

The two firms whose paper I was unable to dispose of 
were about the first to fail, and before the maturity of any 
of the balance of the paper which I had successfully nego- 
tiated both the drawers and endorsers thereon, without a 
single exception, all collapsed. 

The height which Gilroy's kite attained would have been 
nowhere in point of altitude to that which I should have 
reached had I not had the good luck to have cleared my 
decks as I did, and in the nick of time. 

My safety in this instance was due to my inspiration, to 
which I believe myself more indebted than anything else for 
the privilege of remaining in Wall Street up to the present 
date. 

I am no spiritualist -hot theosophist, but this gift or occa- 
sional visitation of Providence, or whatever people may 
choose to call it, to which I am subject at intervals, has 
enabled me to take u points " on the market in at one ear 
and dispose of them through the other without suffering any 
evil consequences therefrom, and to look upon these kind 
friends who usually strew these valuable " tips " so lavishly 
around with the deepest commisseration. My ability to do 
this, whatever may be its source, whether human or divine, 
has saved me from being financially shattered at least two 
or three times annually. 

I do not indulge in any table tapping or dark seances like 
the elder Vanderbilt, but this strange, peculiar and admoni- 
tory influence clings to me in times of approaching squalls 
more tenaciously than at any ordinary junctures. 



80 SECRETARY CHASE AND THE TREASURY. 

I have known others who have had these mysterious 
forebodings, but who recklessly disregarded them, and this 
has been the rock on which they have split in speculative 
emergencies. 

Therefore I say again, beware of "points." They consti- 
tute the ignis fatuus which lure more unfortunate speculators 
to their financial doom than all other influences put together. 




HON. ELBRIDGE GERRY SPAULDING, 

Author of the Legal Tender Act, which authorized the 
issue of greenbacks in 1862. He was a member of 
Congress from New York. He resides at Buffalo, and 
is now in the eightieth year of his age, but still in good 
physical health, with his mind clear and vigorous. 



CHAPTER X. 

THE NATIONAL BANKS. 

Secretary Chase Considers the Problem of Providing 
a National Currency. — How E. G. Spaulding takes 
a Prominent 'Part in the Discussion on the Bank 
Act. — The Act Founded on the Bank Act of the 
State of New York. — Effect of the Act upon the 
Credit of the Country.— A New System of Banking 
Required. 

THE history of the Bank Act of 1863, improved by the 
Act of 1864, would require much larger space than I 
can devote to it in this book. I can only glance at its 
salient points, and show its great influence, not only on the 
finances of the country, but upon the destiny of the nation 
itself. 

The Hon. E. G. Spaulding, who was one of the most prom- 
inent men in dealing with the financial questions of that 
period, has written and preserved a very full history of 
the legislation on the subject, and of the interesting de- 
bates which preceded it. 

After the temporary loans had been negotiated to release 
the pressure upon the Government, Secretary Chase set his 
mind to consider the problem of providing a currency with- 
out disturbing the business organization of the country. 

At this period he was met by a fresh difficulty, in the sus- 
pension of specie payments, which had been hastened by the 
arrest of Mason and Slidell, which, but for the wise policy of 
Mr. Seward, would have precipitated a conflict with Great 
Britain. 

Early in 1862 Congress authorized ten million more of de- 
mand notes. This was followed by further issues, making in 
all 300 million United States notes. Secretary Chase was at 
first opposed to making these notes a legal tender for private 



82 



THE NATIONAL BANKS. 



debts, but in order to get the bill through, he agreed to the 
legal tender clause, as the Government was greatly in need 
of money. 

The Secretary was also empowered by Congress to bor- 
row 500 million dollars on 5-20 year 6 per cent, bonds, and 
also to obtain a temporary loan of 100 millions on condition 
that the interest on the bonds should be paid in coin, 
and that the customs should be collected in coin for that 
purpose. 

The first bill to provide a national currency secured by 
a pledge of United States bonds was introduced by Mr. 
Hooper, in July, 1862, but it was not reported from the Com- 
mittee to which it had been sent. At the meeting of Con- 
gress in December the same year the financial problem had 
become still more complicated, and owing to the magnitude 
which the war had then assumed, the expenses amounted to 
two millions a day. 

The total receipts for the fiscal year ending June 30, 
1863, were 511 millions, and the expenditures were 788 
millions, thus leaving a deficit of 277 millions. 

All the financial wisdom of the Secretary was necessary in 
this dilemma. The question was whether to provide for 
these 277 millions by a fresh issue of United States notes, 
or by interest-bearing loans. 

The Secretary was opposed to increase the volume of the 
currency, saying that the result would be the inflation of 
prices, increase of expenditures, augmentation of debt, and 
ultimately disastrous defeat of the very purposes sought to 
be attained by it. 

He was in favor of an increase in the amount authorized to 
be borrowed on the 5-20 bonds. He advised the creation 
of banking associations which should secure their circula- 
tion by a deposit of Government bonds. One object of this 
was to create a market for the bonds. 

Congress was not in favor of this proposition, and the 
bill of Mr. Hooper was again offered in the following Jan- 



SECURING THE NATIONAL BANKING CURRENCY. 83 

nary, but was adversely reported from the Committee on 
Ways and Means. 

Another new issue of 100 millions United States notes 
was ordered on motion of Mr. Stevens, of Pennsylvania, to 
meet the constantly increasing needs of the army and navy. 

Mr. Lincoln signed the joint resolution ordering the new 
issue with some reluctance, and sent a special message to 
the House, in which he expressed his regret that it was 
necessary to add this last amount to the currency while the 
suspended banks were free to increase their circulation. 

Soon after this Senator Sherman offered a bill to provide a 
national currency, somewhat after the model of Mr. Hooper's 
bill. The Sherman bill was passed before the end of Febru- 
ary. This virtually secured the present national banking 
system. 

In order to show more clearly the nature of the national 
bank legislation, and the prominent part taken by Mr. 
Spaulding and a few others therein, Mr. Chase having been 
the directing mind, it is necessary to make a brief resume of 
the action of Congress with the State banks in this con- 
nection. 

In January, 1862, the banks applied to Secretary Chase 
to receive their notes in payment for the bonds which he 
had for sale, but the Secretary, thinking that this would 
inflate the bank currency, refused the offer. Yet the process 
of inflation went on until it increased from 130 to 167 mil- 
lions. 

When Mr. Spaulding advocated the National Bank Act 
on 'the ground that it would provide a permanently improved 
bank currency, the Hon. Eoscoe Conkling, at that time in 
the lower House, opposed the policy of making war upon 
the twelve hundred banks in the free States, and made a very 
affecting appeal for the orphans and widows who had stock 
therein. He proposed to issue 250 millions of seven per 
cent, bonds, payable in thirty-one years, to be exchanged 
for the bills of the suspended banks of New York, Philadel- 



84 the national banks. 

phia and Boston, and also to issue 200 millions of United 
States notes, payable in coin in a year. Mr. Conkling's 
scheme was assailed by Mr. Bingham, of Ohio, on the 
ground that it would subject the national currency to the 
mercy of city bankers and brokers. Other eminent repre- 
sentatives stood up for the maintenance and integrity of 
the State banks, and notably Mr. Conkling opposed the 
measure vigorously, which was intended to tax the State 
banks out of existence. 

Mr. Spaulding, who advocated the bill, was followed by 
Mr. Fenton in an able argument, showing the superiority of 
a currency secured by United States bonds, and Senator 
Sherman explained the great evil occasioned by the success 
attending the counterfeiting of the State bank notes. 

These arguments seemed to be conclusive and overwhelm- 
ing in the passage of the bill. 

It must not be forgotten, to the honor of the State of New 
York, that the National Bank Act was founded on the Bank- 
ing act of this State, whose chief features were a currency 
secured on public funds, and that directors and stockholders 
should be personally liable. 

The authorship of this idea is attributed to Mr. Stillman, 
who is also the well-known author of the " Stillman Act" to 
abolish imprisonment for debt. 

This bank act, which was especially engineered by the 
far-seeing Secretary of the Treasury, Salmon P. Chase, had 
almost a miraculous effect upon the credit of the country. 
It created a new and extensive market for United States 
bonds, which immediately advanced from 93 to par. 

All the running expenses of the Government, accumulated 
with such rapidity, were paid from the sale of the 5-20' s 
within the short period of two months or thereabouts. 

It was stated in the Treasury report at the end of the year 
that 4< The Bank Act at once inspired faith in the securities 
of the Government, and, more than any other cause, enabled 
the Secretary to provide for the prompt payment of the 
soldiers and the public creditors." 



HOW THK BANK ACT WAS PASSED 



85 



Mr. Hugh McCulloch, the Comptroller of the Currency, 
saw room for certain changes in the law, some of which were 
effected by Congress in the first session of 1864. These 
changes were embodied in the Act of June, 1864. 

There was a long debate and strenuous opposition, in 
which Secretary Chase deeply sympathized, against State 
taxation of the national banks, but despite the opposition 
the taxation clause was carried. 

At length the modified act was passed, limiting the total 
amount of United States notes to be issued to 400 millions, 
with such additional amount, not exceeding 50 millions, as 
might be transiently required for the redemption of the 
temporary loan, and thus the main features of the Bank Act, 
which has served its purpose very well, became a law. 

I hope, however, ere long, as I have more fully intimated 
in another chapter, to see a superior system of banking, 
which I believe must succeed the present system, which is 
now doomed to "innocuous desuetude" through the im- 
minent payment of the public debt. 




NEW YORK STOCK EXCHANGE. 



CHAPTER XI. 

THE NEW YORK STOCK EXCHANGE. 

History of the Organization for Ninety-four Years. — 
From a Button- Wood Tree to a Palace Costing 
Millions of Dollars.— Enormous Growth and De- 
velopment of the Business. — How the Present 
Stock Exchange was Formed by the Consolidation 
of Other Financial Bodies. — Patriotic Action 
During the War Period. — Reminiscences of Men 
and Events. 

THE New York Stock Exchange is not a building, as 
people generally suppose. It is an Association of 
brokers united, but not incorporated by law, for the pur- 
pose of buying and selling representatives of value called 
" stocks " and " bonds." Stocks, in the American sense of 
the term, are properties consisting of shares in joint stock 
companies or corporations, or in the obligations of a gov- 
ernment for its funded debt. In England, government ob- 
ligations only, are called " stocks," and the obligations of 
companies or corporations are called " shares.'' 

The edifice in which the Stock Exchange meets, and 
which, in common parlance, is designated by the name of 
the association of members, occupies a large portion of 
the block bounded by Broad, Wall, and New streets, and 
Exchange Place. Its main entrance is on Broad street, and 
it has entrances also on Wall and New streets. It has 
a frontage of 65 feet on Broad and 158 on New, on which 
the back entrance is situated. The members of the Stock 
Exchange have no need of a charter from the Legislature. 
In fact, they have steadily resisted all attempts of the Solons 
of this State to legislate in their interest. Their action in 
this respect is more fully commented upon in my chapter on 



88 THE NEW YORK STOCK EXCHANGE. 

" Corners." The Tweed Ring, in the height of its power 5 
made a bold attempt to force a charter upon the Stock 
Exchange, but it was indignantly rejected. The irrepress- 
ible "Boss" and his henchmen, by the presentation of false 
names, had a charter for the incorporation of the Stock Ex- 
change passed in 1871, the year prior to Tweed's downfall, and 
it was signed by the Governor. For these gratuitous services 
the sum of $100,000 was impudently demanded ; but the char- 
ter was refused, and the demand repudiated by the associa- 
tion. Since 1879 until recently the membership, which has 
been full, was limited to 1,100, but by a resolution lately 
passed the limit is now placed at 1,200. The seats for the 
past year have sold at from $25,000 to $30,000. 

The Stock Exchange building is a fine, solid structure, 
devoid of anything showy, pretentious or decorative. It 
was designed by James Eenwick, the architect of Grace 
Church and of St. Patrick's Roman Catholic Cathedral, on 
Fifth avenue at Fiftieth street. The cost of the building 
was nearly $2,000,000. It costs nearly $200,000 a year 
to pay the salaries of the various officials and keep 
the building in proper repair. The apparatus for ventilat- 
ing the building is one of the best. It cost $30,000, and 
supplies an abundance of pure air and perfumes at the same 
time. The heating and cooling arrangements are the best 
of their kind, and the lighting is admirable. There are 
three chandeliers containing 200 electric lamps, which throw 
a flood of beautiful soft light around the whole interior. The 
building is well supplied with rooms for members, lavatories, 
and closets. One great feature of the interior consists of 
the large vaults, which contain more than a thousand safes 
for the safe keeping of securities. About 400 of those safes are 
let to persons who are not members. The vaults and safes 
are considered the strongest in the country. 

The growth of this institution appears marvelous when we 
go back to its humble beginning in 1792, when the originators 
formed the association under a button-wood tree in front of 



THE ORIGINAL ORGANIZATION. 89 

what is now No. 60 Wall street. Following is the text of the 
simple agreement into which the original members entered : 
"We, the subscribers, brokers for the purchase and sale 
of public stocks, do hereby solemnly promise and pledge 
ourselves to each other that we will not buy or sell from 
this date, for any person whatsoever any kind of public 
stocks at a less rate than one- quarter of one per cent, com- 
mission on the specie value, and that we will give a prefer- 
ence to each other in our negotiations. In testimony whereof, 
we have set our hands this 17th day of May, at New Xbrk, 
1792. Lem Bleekez, Hugh Smith, Armstrong & Barnewell, 
Samuel Marsh, Bernard Hart, Sutton & Hardy, Benjamin 
Seixas, John Heary, John A. Hardenbrook, Amurt Beebee, 
Alexander Gunty, Andrew D. Barclay, Empn. Hart, Julian 
Mclvers, G. N. Bleecker, Peter Inspach, Benjamin Win- 
throp, James Ferrers, Isaac M. Gomez, Augustine H. Law- 
rence, John Besley, Charles Mclvers, Jr., Robinson & Harts- 
horn, David Keedy." 

This arrangement existed, and was the only one by which 
the members were bound, until 1820, when daily meetings 
and the regular call of stocks began. The Board met in 
various places, including the old Merchants' Exchange on 
the corner of Wall and William streets, but did not take 
root in permanent shape until the year 1842, when it became 
established in the new Merchants' Exchange, now the Cus- 
tom House. An illustration of the old Merchants' Exchange 
is given on another page. The sight of it will doubtless 
awake a host of endearing reminiscences in the minds of 
some of the oldest merchants and speculators. It will be 
remembered by the few survivors of that period that about 
the year 1820 the meetings of the Board were held in the 
office of Samuel J. Beebee, at 47 Wall street. The Board 
also met in a room in the rear of Leonard Bleecker's ; also 
in the office of the old Courier and Journal. Subsequently 
the meetings of the Board were held in an upper room of 
the old Merchants' Exchange. This building was destroyed 



90 THE NEW YORK STOCK EXCHANGE. 

by the great fire of 1835, and afterwards the new Merchants' 
Exchange was built. The Board moved into this building 
in 1842, and remained there until 1853. Up to this time 
the Board was the very closest of corporations, its member- 
ship being governed by the most iron-clad rules. There 
was no field for financial news agencies in those days, for 
the Board kept its proceedings a profound mystery, and its 
members were bound to the strictest secresy on pain of ex- 
pulsion. That wonderful development of our later civiliza- 
tion, the ubiquitous interviewer, was then unknown. The 
business of the Board excited the most intense curiosity, 
and so impatient did outsiders become to learn the myster- 
ies of the interior, that the members of an open Board 
which was organized about the year 1837, after failing to 
force themselves into the regular association, engaged a 
building next to the Board-room, and dug the bricks out of 
the wall in order that they might see and hear what was 
going on. 

The Board removed from the Merchants' Exchange build- 
ing in 1853 to a room in the Commercial Exchange Bank 
building, at the corner of Beaver and William. About the 
year 1857, memorable as the period of the great panic, and my 
advent in Wall Street, the Board removed to "Dan Lord's 
building," which had entrances on William and Beaver 
streets. It was here, about the time of my advent, in Wall 
street, more fully described in another chapter, that some 
of the great speculators of that era figured. Among these 
were Daniel Drew, Jacob Little, and the lightning calcula- 
tor, Morse, who made and lost a fortune of millions in little 
more than a year. In this building the rule of secresy was 
not relaxed, and the fact is on record that a hundred dol- 
lars a day were freely offered for the privilege of listening 
at the key-hole during the time of the calls. The Board 
continued to hold its meetings in this building during the 
war, and up to 1865, when it removed to the present edifice. 




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PATRIOTISM OF THK STOCK EXCHANGE. 91 

It is worthy of note here that the Stock Exchange, dor* 
ing the war, for the purpose of assisting the Government, 
passed a resolution prohibiting members from selling Gov- 
ernment bonds " short ;" and also a resolution forbidding 
all dealings in gold. The latter resolution was the princi- 
pal cause of the formation of the Gold Exchange. This 
action on the part of the Stock Exchange was taken at a 
pecuniary loss of many millions of dollars, the sacrifice 
having been made for the highest and noblest of patriotic 
purposes ; yet, in the face of such an historic record as this 
some people still imagine that the members of the Stock 
Exchange never have been anything but a selfish set of 
money grabbers. Is there any other institution in the 
country whose members would have made such a personal 
sacrifice in the interest of the Government ? I doubt if there 
is. Certainly, none did. 

There was a second Open Board of Brokers formed in the 
year 1863. It took up its quarters first in a basement in Wil- 
liam street, called the "Coal Hole." The membership began to 
increase rapidly, and the business accumulated so fast that 
the Board was soon enabled to take more capacious accom- 
modations on Broad street, contiguous to the Stock Exchange. 
In this menacing attitude the new Board began to make 
serious inroads on the business of the old one, almost one- 
half of which it had acquired by the year 1869, when the 
old Board called a truce. It was seen by the judicious 
members of the Board that the competition was likely to 
work the ruin of both, and amicable negotiations were begun 
which culminated in consolidation. So the Open Board, the 
Stock Exchange and the United States Government Board 
were consolidated in May, 1869, making the strongest public 
financial association in the country, and one of the most 
important in the world, and placing it upon an almost im- 
pregnable footing. Mr. WilliamNeilsonwas the first Presi- 
dent in the new building. 



92 



THE NEW YORK STOCK EXCHANGE. 



The following are the names of the Presidents of the ~New 
York Stock Exchange from 1824 until the present time: 



1824. 


.Edw. Ltde. 


1862. 


.A. B. Baylis. 


1825. 


a 


1863. 


.H. G. Stebbins. 


. 


.John Wicker. 


1864. 


.Wm. Seymour, Jr. 


1828. 


a 


1865. 


.R. L. Cutting. 


1829. 


a 

• 


1866. 


.Wm. Alex. Smith. 


1830. 


.Russell H. Kevins. 


1867. 


.John Warren. 


1831. 


.John Ward. 


1868. 


.Wm. Searles. 


1832. 


tt 


1869. 


.W. H. Keelson. 


1833. 


a 


1870. 


.Wm. Seymour. 


1834. 


.R. D. Weeks. 


1871. 


.W. B. Clarke. 


1835. 


.E. Prime. 


1872. 


.Edw. King. 


1836. 


.R. D. Weeks. 


1873. 


.Hy. G. Chapman. 


1837. 


.David Clarkson. 


1874. 


.Geo. H. Brodhead. 


1838. 


u 


1875. 


.Geo. W. McLean. 


1839. 


a 


1876. 


.Salem T. Russell. 


1840. 


tt 


1877. 


.Henry Meigs. 


1841. 


a 


1878. 


.Brayton Ives. 


1842. 


it 


1879. 


a 


1843. 


a 


1880. 


.Donald Maceay. 


1844. 


a 

• 


1881. 


a 


1845. 


a 


1882. 


.F. N. Lawrence. 


1846. 


it 


1883. 


.A. S. Hatch. 


1847. 


a 


1884. 


.J. Edward Simmons 


1848. 


it 


1885. 


a 


1849. 


tt 


1886. 


.James D. Smith. 


1850. 


u 


1887. 


a 


1851. 


.H. G. Stebbins. 


1888. 


a 


1852. 


.C. K. Marvin. 


1889. 


.Wm. L. Bull. 


1853. 


a 


1890. 


n 


1854. 


a 


1891. 


.W. B. DlCKERMAN. 


1855. 


tt 


1892. 


it 


1856. 


a 


1893. 


.E. K Sturgis. 


1857. 


.J. H. GOTJREIE. 


1894. 


a 


1858. 


.H. G. Stebbins. 


1895. 


.F. L. Eames. 


1859. 


.W. H. Neilson. 


1896. 


a 


1860. 


u 


1897. 


a 


1861. 


a 


1898. 


a 



OLDEST LIVING MEMBERS OF THE EXCHANGE. 



93 



1899.. R. 


Keppler. 


1904. .R. H. Thomas. 


1900.. 


(6 


1905.. H. K Pomroy. 


1901.. 


a 


1906.. R. H. Thomas. 


1902.. 


a 


1907.. 


1903.. 


a 


1908.. " 



Jacob Isaacs - 
Bernard Hart 
Geo. H. Brodhead 
B. Ogden White - 
George W. Ely - 
Wm. McClure 
George W. Ely - 



was Secretary from 1824 to 1831. 

" 1831 " 1855. 

" " " 1855 " 1870. 

" " " 1870 " 1883. 

" " 1883 " 1900. 

" " 1900 " 1905. 

" " 1905 " 1908. 



Ten Oldest Living Members to 1907, all of whom 
joined the Exchange prior to July 1, 1864. 



William Alexander Smith. 
Henry Clews. 
E. C. Benedict. 
John H. Jacquelin. 
H. S. Camblos. 



L. D. Huntington. 
J. H. Whitehouse. 
A. S. Clark. 
Edwin Corning. 
L. J. Van Boskeeck. 



CHAPTEK XII. 

"CORNERS" AND THEIR EFFECT ON VALUES. 

The Senate Committee on " Corners" and " Futures." — 
Speculation Beneficial to the Country at Large. — 
A Kegulator of Values, and an Important Agent in 
the Prevention of Panics. — "Corners" in all kinds 
of Business. — How A. T. Stewart made " Corners." — 
All Importing Firms deal in "Futures."— Legisla- 
tion Against "Corners" would stop Enterprise and 
cause stagnation in Business. — Only the Conspira- 
tors themselves get hurt in " Corners." — The Black 
Friday " Corner."— Speculation in Grain Beneficial 
to Consumers. 

THE New York Stock Exchange is organized after the same 
manner as a social club, such as the Union League, the 
Union or the Manhattan, and not under a special charter 
from the Legislature. Hence it is protected from the inter- 
ference of that honorable body. 

Although various attempts have been made, from time to 
time, at Albany, to levy taxes upon the transactions of 
the Exchange, and to interfere with the business of specula- 
tion and investment in many other ways, these legislative 
designs have hitherto been happily frustrated. 

Shortly after the memorable "corner" in Hannibal & St. 
Jo., in 1881, another attempt was made by the Legislature to 
force Wall Street matters under the jurisdiction of Albany 
lobbyists and " scalpers." 

The newspaper articles on the subject of the " corner" had 
attracted the attention of the Legislature then in session, 
and naturally suggested to some of the wiseacres of that 
dignified and incorruptible body that the "corner" afforded 
an excellent opportunity, when the public mind was excited 
on the subject, to raise an outcry against the shocking im- 
morality of such huge speculations. 



96 "corners." 

A Senate Committee on "corners" and "futures" was 
therefore appointed, and various Wall Street men were 
summoned to appear before it, and give their testimony on 
this interesting subject. I had the honor of being one of 
the witnesses cited. I promptly obeyed the subpoena in 
preference to taking the risk of being hauled up for con- 
tempt and sent to durance vile. I appeared before the Com- 
mittee at the Metropolitan Hotel, and not only answered all 
questions put to me, without any fashionable lapses of 
_jnempry, after the manner of certain other financiers, but I 
regaled the Committee with a little dissertation on the sub- 
ject of investigation I had letters from members of the 
Legislature afterwards complimenting me for having made 
the points very clear. So I can say, " Praise from Sir Hubert 
is praise indeed," and therefore I am encouraged to repro- 
duce that effort in this volume, not so much from an intense 
desire to go down to posterity as a successful orator, as from 
a disposition to record my approval, in more permanent from, 
of the soundness of the legislative judgment on my explana- 
tion of "corners." 

When the applause had subsided, I spoke as follows : 

K Gentlemen of the Committee on Corners and Futures : 
Speculation is a method now adopted for adjusting differ- 
ences of opinion as to future values, whether of products or 
securities. This is more common now than in former years 
because the facilities for procuring information have in- 
creased with the greater intelligence and celerity with which 
all business is now conducted, and also from the greater 
rapidity with which such information can be transmitted by 
telegraph and cable. 

" In former years the results of a crop were known only 
when it came to the market. Now almost everything affecting 
its future value is known with a fair degree of accuracy before 
the crop is harvested. This advanced information naturally 
becomes the subject of speculative transactions which could 
not have existed in former times. 



A. T. STEWART A CHAMPION " CORN^RER." 9? 

" Speculation brings into play the best intelligence as to 
the future of values. It has always two sides. The one that 
is based principally on the facts and conditions of the situa- 
tion wins in the end, and the result of the conflict is the 
nearest possible approach to correct values. The conse- 
quences of speculation are thus financially beneficial to the 
country at large. 

" Speculation for a fall in prices is based upon the pre- 
sumption of an over-supply. If it succeeds, the production 
of the particular product is checked until prices recover, and 
m the meantime production is diverted to articles less abun- 
dant. Thus speculation proves a regulator both of values 
and production. Speculation for a rise in prices is based 
upon a presumption of scarcity or short supply, and its 
direct effect is to quicken production and restore the equili- 
brium of prices. 

" " Corners ' usually come from running speculation to an 
excessive length, by which the seller becomes responsible for 
deliveries beyond what he can possibly make. He thereby 
places himself at the mercy of those with whom he has made 
the contracts. These exigencies chiefly affect the speculators 
themselves, and the community at large but little. 

"Extreme prices usually grow out of them, but they are 
only momentary, and have small effect upon regular or cash 
transactions, which sympathize very remotely with these 
temporary and artificial quotations. 

" Speculation is not to be judged by its occasional excesses, 
but by the general effects which the foregoing considerations 
show to be beneficial. It regulates production by instanta- 
neously advancing prices when there is a scarcity, thereby 
stimulating production, and by depressing prices when 
there is over-production. It thus becomes one of the most 
beneficial agents in the business world for the prevention 
of panics. 

" Speculation, moreover, makes a market for securities that 
otherwise would not exist. It enables railroads to be built 



98 

through the ready sale of their bonds, thus adding mater- 
ially to the wealth of the whole country, and opening a more 
profitable market to labor. In this it becomes the forerun- 
ner of enterprise and material prosperity in business. 

"There are 'corners' in all kinds of business as well as in 
Wall Street speculation. Mr. A. T. Stewart, the great dry 
goods merchant, made more ' corners' during the latter part 
of his life than half the rest of the business community put 
together. He did this mainly by contracting for the entire 
and exclusive production of certain classes of goods, and as 
such goods could only be bought at his establishment he 
had a close ' corner ' in them, and accordingly put on his own 
prices. 

" The greater portion of all the large mercantile firms do 
business in the same way. And all the importing firms deal 
in futures. They sell goods by sample, agreeing to deliver 
them at a future stated period, varying from thirty days to 
twelve months. In the meantime the goods have to be 
manufactured, and in many instances purchasers have to 
wait until they are grown, and imported thousands of miles. 

" If it were not for the support which comes from the ' short' 
interest in grain and the general activity created thereby in 
times of depression, which come periodically in this coun- 
try, it would be in the power of the large speculative grain 
dealers in Europe to manipulate prices downward, and pur- 
chase our products every year, on raids, at prices much un- 
der the cost of production. 

" When we sell to Europe we must do so at a profit, or our 
transactions don't help to enrich the country. 

"Another curious thing about * corners ' is that the people 
who organize and manipulate them generally get most hurt 
in the enterprise. This was the case with the 4 corner ' re- 
ferred to in Hannibal and St. Joseph. Mr. John Duff, of 
Boston, was the man in whose prolific brain that 'corner' 
originated, and the result to him was financial ruin. The 
stock ran up to 350, though the short account amounted to 



CAN'T I^GlSlfATE AGAINST " CORNERS.' ' 99 

only about 1,200 shares, and the * shorts' had to settle at 
280. 

" The result was similar in the * corner ' in Northwest in 
1872, manipulated by Jay Gould. The stock was started at 
80 and it ran up to 280. It then reacted to the former fig- 
ure. I believe Jay Gould was alone in that deal, and it 
came pretty near crushing him, in spite of his incomparable 
capacity for wriggling out of a tight place, 

" Patents are i corners ' protected by law. The inventor has 
a monopoly for seventeen years in his invention against all 
the world, and this gives him a right to make and sell the 
article covered by his patent, often at a profit of several 
hundred per cent, on the original cost, and on the price it 
would bring if placed in competition in the open market, 
like railroad stocks and grain. 

"If it is the intention of the Legislature of this State to 
stop enterprise in business, then your Committee is under- 
taking to accomplish that work in the right way, but I think 
your success would be a public calamity." 

I doubt the expediency of either undertaking to regulate 
enterprise by law or to choke off competition by the law- 
making power. The result would be woeful stagnation in 
business. It would crush the motives for commercial 
activity and depress the creative energies of prosperity. 

The law of supply and demand is the best regulator. 

Congress attempted to suppress speculation in gold dur- 
ing the war, and as soon as the act was passed prohibiting 
such dealings, the premium on gold advanced 100 per cent. 
This so much terrified the wise ^statesmen who concocted 
this sweeping measure of financial reform, that they im- 
mediately displayed much more wisdom in hastening to have 
the bill repealed. 

The simple reason that such laws will not work in prac- 
tice is that where there is a will there is generally a way to 
evade them. This is the case with the very best of such 
laws that can possibly be framed. Take the usury laws for 



100 

example. The methods of getting around these are numer- 
ous, and there is practically no limit to the rate of interest 
that can be exacted except the conscience of the lender, 
which is frequently very elastic. Daniel O'Oonnell said he 
could drive a coach and six through any act of Parliament. 
Jake Sharp was also of opinion that he could run a double- 
track horse-car railroad through the best act that could be 
framed by any Albany Legislature. Jake was checked in 
his career at considerable trouble and expense, but his case 
illustrated that the rule referred to holds good generally in 
legislation. 

The fact, however, that it seldom happens that anybody 
gets badly hurt in u corners," except the conspirators them- 
selves, is sufficient protection for the general public, and 
should set the minds of legislators at rest, if they mean to 
do legitimate business in their law-making capacity. 

The conspirators in "corners" are usually left high and 
dry without any market for their fictitious values, and the 
"corner" very frequently has the effect of putting the 
property out of the speculative market for a long time. The 
fate of Han. & St. Jo. is a warning to those who manipulate 
" corners." The stock was seldom quoted for months after- 
wards. 

Take the case of Black Friday for example. It was most 
disastrous to the parties intimately connected with it. It 
came near proving Gould's ruin, and he has not got over the 
moral effect of it yet. The probability is it will be an heirloom 
in his family, a skeleton in the Gould closet for generations 
to come. Gould and Black Friday have become synonymous 
in the minds of many people, and the further from Wall 
Street the more the distinction becomes confounded. 

In making these remarks I have no intention of throwing 
any reflection upon Mr. George Gould, who seems to be a 
very promising young man for a rich man's son. His careful 
education has, no doubt, done much to counteract the draw- 
backs incident to the sons of wealthy men to which I have 



101 

referred more fully in another part of this book. His mater- 
nal training, I understand, has been of the most exemplary 
kind. This will go far to offset the disadvantages to a 
business career, which the accident of his birth in luxurious 
surroundings, according to my theory, otherwise entails. If 
his brain is composed of the genuine plastic material out 
of which the craniums of successful financiers are made, he 
may learn to forget that he has been nursed in the lap of 
luxury, and look back with due respect to the hole whence 
his father was digged and the rock whence he was hewn. 
He may have brains enough, possibly, to reflect with more 
pride on that ingenious mousetrap that first brought his 
father into prominence, than the gew-gaws of the gilded 
palace in Fifth avenue, the luxuries of the handsome 
parlors and rich conservatories at Irvington, and the 
gorgeous trappings of his father's yacht and palace cars. 
I have, therefore, great hopes that George will be a con- 
spicuous exception to the rule I have propounded elsewhere 
regarding rich men's sons. 

When a large mercantile firm buys up goods in any line 
so that nobody else has the same goods, it then has a 
"corner" in these goods. 

" Corners " in goods differ from "corners" in Wall street in 
regard to their influence on the organizers. They don't act 
like a boomerang as the Wall Street " corners '' mostly do. 
The u corner" is sometimes sustained during the life of the 
manipulator, as in the case of Mr. Stewart. 

The successors of the great operators sometimes maintain 
it, but in this instance Judge Hilton made a signal failure, 
though in some respects he is a far abler man than Stewart 
was. Yet, he had not the genius, for working " corners," of 
his eminent predecessor. He is, probably, so well learned in 
the law that he has too much inclination to go around the 
"corners." 

One thing is certain, very few of these merchants can be- 
come wealthy except through the medium of " corners." It 



102 * v CORNERS." 

is by these peculiar methods that nearly all large fortunes 
are amassed in their line, and in a perfectly legitimate man- 
ner, too, whatever casuists and hair-splitting moralists may 
say or think about the matter. The tendency to make " cor- 
ners " seems to be interwoven in our business methods, and 
to play an important part in the struggle for existence. So 
I don't see what we are going to do about it without a radi- 
cal change in that compendium of the best political wisdom 
that the world has ever seen. I refer to the Constitution of 
the United States. All the acumen and sophistry which the 
most astute Philadelphia lawyer could bring to bear upon it 
has hitherto failed to show that there is anything in this 
wonderful document opposed to the liberty of making 
" corners." 

As Mr. Gladstone has truly said : " This document is the 
most wonderful work ever struck off at a given time by the 
brain and purpose of man." 

I hold there is nothing in the Constitution opposed to 
the freedom of making "corners," and that all the evils re- 
sulting from these speculative inventions can be met and 
counteracted by business methods, and the laws regulating 
the ordinary concerns of life without resorting to any rigid 
or special methods. 

To dispose of " corners " or abolish them on the large 
scale to which I have alluded would presume an entire 
revolution in our social system, and to attack them piece- 
meal, as the Legislature frequently does, involves a very 
suspicious kind of discrimination, and is at variance with 
the spirit of the Constitution. In fact it often amounts to a 
kind of thinly-disguised blackmail. 

The truth is, that it is almost impossible to legislate 
against " corners " without aiming a fatal blow at specula- 
tion itself, which, as I have shown, is a vital principle in the 
regulation of values, the stability of business, and the pre- 
vention of panics. 

I believe the men of most experience, not only in Wall 



BY THE STATE OF GEORGIA. 103 

Street, but in other departments of finance and commerce, 
will bear me out in the statement that a market where even 
values are considerably inflated by speculation, is more de- 
sirable than a period of depression. The result, in the long 
run, is the greatest good to the greatest number. I don't be- 
lieve that the ghost of Jeremy Bentham himself could rise 
up and consistently condemn this statement. 

I believe that speculation in grain and provisions is ma- 
terially beneficial to consumers, and that the latter are better 
o% one year with another, and less liable to be menaced with 
periodical famines, than if there were no speculation in these 
necessities of life. 

Before leaving this prolific theme of " corners " I wish to 
say a few words about my own experience in that line. The 
only "corner " in which I have ever been materially hurt dur- 
ing my long business experience was one manipulated by 
the State of Georgia. 

This Sovereign State issued and granted altogether about 
eight millions of bonds, all bearing the great seal, properly 
signed and legally issued for full value. I advanced over 
two million dollars in good money on a part of these bonds. 
Shortly after this transaction, the State of Georgia ascer- 
tained through a garbled report of a committee sent to this 
city by the Georgia Legislature, that all these bonds were 
held outside of her own borders. The Legislature then passed 
an act of repudiation, thereby reducing the value of the 
bonds from par to that of waste paper. When I discovered 
that my little pile of two million dollars in what I consid- 
ered good securities would no longer exchange for green- 
backs, I had a very disagreeable sensation of having been 
" cornered " by the high toned and chivalrous representatives 
of the State of Georgia, which, through its lawmakers, claimed 
the sovereign right to do wrong to the citizens of a sister 
State. 

In the Harlem " corner," which is referred to in another 
place, contracts to deliver at 110 were settled at 179. 



104 



About three million dollars were taken out of the pockets 
of the bears. Several prominent houses went down in the 
struggle. The result of the "corner" was that the bulls were 
saddled with the entire capital stock of the property. 

One broker, who had sold calls at 150 and was requested to 
fulfil his contracts when the stock had advanced to 250, was 
very much in the same position as Glendower's spirits, which 
were called from the vasty deep but would not come. "I 
don't see anything here," he said, " about delivering. You 
can call, but I don't mind it." 

There were two "corners" in Harlem. The Common 
Council was cornered in one and the Legislature in the 
other. 

In the Rock Island "corner "the bulls bought 20,000 
shares more than existed, and the price rose from 110 to 
150. 

London financiers have a fearful horror of "corners." 
Hence the London Stock Exchange is very chary about 
listing our railroads, especially those with a moderate 
number of shares. 

" Corners" are seldom profitable, and the parties connected 
with them can hardly escape getting badly hurt unless they 
are prepared to own and carry the entire property. Even 
in that event, it is usually put out of the speculative market 
for a considerable time. 

The Hudson " corner " was one of the most successful. It 
paid a profit of 12 per cent. There was a profit of 4| on 
the Hock Island " corner." 

The first " corner " of which there is any record in Wall 
Street was in Morris Canal, an old "fancy" now almost for- 
gotten except for its " corner." It had been forced upward 
as fancies frequently are, until it was far above its intrinsic 
value, and several operators began to sell "short." 

After this operation had gone on for some time a pool 
was formed to protect it, and the pool bought it all up and 
locked it up in a trunk. The operation was new to the 



THE MORRIS CANAL, " CORNER.' ' 105 

Street and the bears were astounded, but when called upon 
to settle they became furious, and accused the manipulators 
of the " corner " of entering into a conspiracy. The "bulls " 
asked the " bears " why they had sold what they did not pos- 
sess and could not procure. 

The dispute was referred to the arbitration of the Board 
of Brokers, and that eminent body, then unsophisticated in 
the arts of speculation, took what seemed to them an equit- 
able view of the case, and decided it in favor of the 
u shorts," who, on the ground of conspiracy on the part of 
the clique, were relieved from fulfilling their obligations. 



CHAPTEE XIII. 

THE COMMODORE'S "CORNERS." 

The Great Hudson " Corner."— Commodore Vanderrilt 
the "boss" of the situation. — the " corner " 
Forced upon Him."— How he Managed the Trick op 
getting the bears to " turn " the stock, and then 
caught them. — hls able device of unloading while 
Forcing the Bears to Cover at High Figures. — The 
Harlem " Corner.'' — The Common Council Betrayed 
the Commodore, but were Caught in their own 
Trap, and Lost Millions. — The Legislature Attempt 
the same Game, and meet with a Similar Fate. 

IN the Hudson "corner," the stock jumped from 112 to 180. 
Commodore Yanderbilt was the " Boss " of the situa- 
tion in this "corner." He got the "bulge " completely on all 
the other parties connected with it, and what is more, he 
had the balance of the sympathy of the Street with him, for 
he was not the aggressor in getting up the " corner." The 
fighting at first was forced upon him, but he acted on the 
defensive in a way that made his opponents sorry for their 
rashness. Though he did not know much about Shake- 
speare, he acted in accordance with old Polonius' advice to 
his son by pushing the opposition to the wall. 

As soon as he gained the mastery, he became severely ag- 
gressive, as he was in everything. 

The beginning of this story of the Hudson " corner" is 
somewhat romantic. The Commodore was sunning himself 
on a pile of logs on the Jersey side of the Hudson while his 
yacht lay in the stream, and he was in the mood for enjoy- 
ing a long and well-earned vacation, attempting to lay aside 
for a time the toil and trouble of eking out a precarious 
existence in speculation. While basking in the noon-day 
sun and gazing with delight on the luxurious foliage that 
arose from the New Jersey bank of the river, he was aroused 



108 

from his charming reverie by a messenger from Wall Street, 
who conveyed to him the important intelligence that a 
wicked and unregenerate clique of " bears " had conspired to 
sell Hudson stock " short," and that it was declining with 
great rapidity under the repeated and unmerciful blows of 
their hammers. 

The Commodore arose and shook off his lethargy, as a 
lion may be supposed to shake the dew from his mane prior 
to his preparation for a spring upon an unfortunate foe . 

The Commodore hastened down to Wall Street and in- 
structed his brokers to take all the sellers' options offered 
in Hudson. Cash stock was then taken as quickly as pos- 
sible until the market was bare. A brief calculation showed 
that the buyers had secured either as cash or contract stock 
all the Hudson stock in existence with the exception of a 
small number of shares which were not expected to come 
upon the market. 

The prolific brain of the Commodore then invented a 
new move in the game. A number of leading " bear " houses 
were requested to " turn " Hudson, which means to buy it 
for cash from the cornering party and sell it back to them 
on buyers' options for periods varying from ten to thirty 
days. This able ruse was intended to impress the bears 
with the idea that the cornering party was weak. It seemed 
as if they were short of cash. So the leading bears grasped 
at the good chance, as they imagined, of turning several 
thousand shares, and instantly threw the cash stock on the 
market. It was privately picked up by the brokers of the 
great "cornerer." 

Everything having thus far progressed in favor of the 
ruse the trap was sprung upon the unsuspecting party. 
The sellers' options began to mature, and there was no Hud- 
son to be obtained. 

The "corner" was complete, and the stock rose to 180. It 
had been 112 a few mornings before, when the Commodore 
was basking in the sun, and found that the bears were tak- 



THE GREAT HUDSON "CORNER." 109 

ing advantage of his absence. The loss on a hundred 
shares was $6,800. 

There were about 50,000 shares contracted for to be 
delivered at this rate of profit by the " cornerers." It will 
thus be seen that they were well fixed. 

The bears were in terrible anguish. 

But the worst part of the deal for these poor animals had 
yet to come. The bears who had turned the stock were 
notified that they must stand and deliver. They complained 
bitterly of the ingratitude of the bulls, whom they had only 
sought to oblige, by turning the stock. The bulls were 
implacable, however, and demanded their property. They 
proposed a compromise which was most exacting. They 
were willing to lend stock at five per cent, per day. Some 
of the bears paid this, thinking the "corner" would be of 
short duration, but it continued for over two weeks, and, 
after paying five per cent, a day for several days, these poor 
victims bought the stock at the high rate and settled. 

This double move in turning the stock was the ablest 
aick that had ever been accomplished in cornering. It 
made Vanderbilt king of strategists in that line. 

But the best part of the stratagem was that wherein the 
bulls saved themselves from being saddled with the whole 
stock, and made immense profits out of the deal. 

While some of the bears were purchasing to cover at 170, 
Vanderbilt's private brokers were selling at 140, the clique 
thus craftily unloading at good paying figures. This was 
one of the best inside moves in the whole history of 
" corners." 

The bulls thus saved themselves from the risk of being 
loaded with probably the whole, or at any rate the greater 
part of the capital stock, and through the Commodore's able 
management the load was comparatively light at the end of 
the deal, the property remaining as good a speculative as 
before, which is a rare exception in " corners." 

The "corner" in Harlem was not less skilfully managed 



110 " CORNERS.' ' 

than the one in Hudson, but it had fewer complications. It 
was all plain sailing, so to speak, compared with the for- 
mer, yet it clearly illustrated that the Commodore had a 
genius for "corners." "When he managed the Harlem "cor- 
ner " he had had no experience in railroad matters, and he 
had reached the ripe age of sixty-nine. 

I place the Hudson "corner "first in order because it was, 
in several respects, the greatest, though it happened at a 
later date than the Harlem. 

It is a curious fact that in nearly all "corners" with which 
the Commodore was connected, he was on the defensive, and 
seldom the aggressor at the beginning of the fight. He was 
always placed in such a position that he had to fight hard 
to defend his property, or let it go to the dogs. 

Buying stock in Harlem was his first venture in railroad 
transactions. He bought it as an investment. This was in 
1863. Thirty years prior to this he had been requested to 
go into Harlem, but he declined, ironically remarking: 
"I'm a steamboat man, a competitor of these steam contri- 
vances that you tell us will run on dry land. Go ahead. I wish 
you well, but I never shall have anything to do with 'em." 

When the Commodore went into Harlem it was selling at 
eight or nine dollars a share. It had been down as low as 
three dollars about the time I arrived in Wall Street. He 
put some money in the road, began improvements and the 
stock soon rose to 30. Many people predicted that the 
Commodore would lose all the money in railroads that he 
had made in steamboats. 

The stock, however, gradually rose to 50, and speculators 
began to perceive that there was some inside movement go- 
ing on. This was made apparent when one day in April, 
1863, the Common Council of this city passed an ordinance 
authorizing the Commodore to build a street railroad down 
Broadway to the Battery. So Jake Sharp's enterprise was 
not original, as the Commodore was over twenty years ahead 
of him. 



THE COMMODORE ENTRAPS THE ALDERMEN. Ill 

The Common Council were not immaculate in those days 
either, though the Jaehnes and Waites escaped punishment. 
They basely deceived the Commodore after taking his 
money ; but he punished them severely. As soon as the 
franchise was granted, Harlem advanced to 75, and the Alder- 
men began to sell it "short." They thought they had the 
Commodore fast in their clutches, and took their friends 
into the secret. They expected to sell enough of stock to 
make several millions. Their plan was to sell " short " all 
that the market would take, and then repeal the ordinance, 
which would cause the stock to drop probably below 50. 
Drew was one of the great bears in this deal with the Alder- 
men. 

The Commodore got wind of the scheme, went on buying, 
and got others to help him, taking all the " shorts " that were 
offered. The operators had soon sold a great deal more 
Harlem stock than there was actually in existence. There 
were 110,000 shares of Harlem. When the Aldermen and 
their friends thought they had made millions, they repealed 
the ordinance, and Judge Brady, in the Court of Common 
Pleas, at the same time issued an injunction prohibiting the 
laying of rails on the Broadway road. 

Everybody thought that the Commodore was hopelessly 
ruined. Harlem stock, however, dropped three points only, 
to 72. This created surprise among the Aldermen and the 
bears. They thought it should have dropped to 50. The 
" shorts " went into the market for the purpose of covering. 
Harlem ascended with amazing rapidity to 100, to 150, to 
170 and finally to 179. The Common Council were obliged 
to make their final settlements at the last figure. The Com- 
modore had all the stock. The Common Council lost a mil- 
lion, and their friends, whom they had advised to sell 
" short," lost several millions. The Commodore " raked in " 
five or six millions, and went on his way rejoicing and im- 
proving Harlem, having now taken " Bill " in with him as 
vice president. 



112 

One would naturally imagine that the severe lesson which 
the Common Council had received in " corners" would 
have taught others to beware of the Commodore in this line 
of speculation, although it was new to him, but it did not. 
People as a rule will not learn either by precept or example. 
They must go through the rough experience themselves. 

The Legislature soon fell into the same trap in which the 
Common Council had been caught and which they had 
actually set for themselves. The following year the Com- 
modore secured control of the Hudson Eiver Railroad 
through the purchase of its stock, and afterwards secured 
a sufficient number of the members of the Legislature to 
pass a bill consolidating the road with Harlem. He also 
won the promise of the Governor to sign the bill. 

Harlem again began to rise, and went from 75 to 150. 
This was early in 1864. 

The members of the Legislature employed to pass the 
bilJ pocketed the money of the Commodore and then 
hatched a conspiracy, after the manner of the Common 
Council, to ruin him and make millions by his fall. He 
had a shrewd lobbyist in the Legislature, however, who 
attentively watched his interests while he came down to 
New York to purchase stock for the rise that must have 
necessarily followed the passage of the bill. He had not 
been long in Wall Street when he was informed that the 
Legislature were imitating the game in which the Common 
Council had been so signally defeated the previous year. 
The Commodore sent him word to keep close watch at 
Albany, and he went on buying stock in Wall Street. 

The bill was defeated. Harlem stock had a slump from 
150 to 90. The Commodore was in a dilemma, and would 
have been dreadfully embarrassed only for the intense 
avarice of the Legislature. If they had bought and 
delivered at 90, they would have made millions, which the 
Commodore would have lost ; but, like the horse leech's 
daughter, they cried out for more. Nothing would satisfy 



" SQUEEZING' ' THE LEGISLATURE. H3 

them until the stock should be depressed to 50. Then they 
could ft scoop " in several millions and the Commodore 
would be wound up. This was probably the darkest hour 
in the Commodore's life. He hardly knew which way to 
turn. He was on the ragged edge. He has often patheti- 
cally described his feelings at this crisis to his intimate 
friends. He was almost on the brink of despair. He sent 
for old John Tobin, who had been a gate keeper at the ferry- 
house at Staten Island. Tobin had made quite a haul in 
the former deal in Harlem, and was worth over a million. 
He told Tobin what the perfidious members of the Legisla- 
ture had done. John had been buying Harlem also in pros- 
pect of a rise. 

"They stuck you too, John," said the Commodore. 
"How do you feel about it?" John sighed, and replied 
that his feelings were not the most enviable. " Shall we 
let 'em bleed us ?" queried the Commodore. 

John sighed again, but did not know what reply to make. 

u John, don't them fellows need dressing down3" emphati- 
cally queried the Commodore. John answered in the affir- 
mative, but did not see how it was to be accomplished, as 
"them fellows" at that moment seemed to hold the fort. 

After a pause of deep reflection, the Commodore, again 
addressing John with intensified emphasis in his tone, said : 
''John, let us teach 'em never to go back on their word again 
as long as they draw breath. Let us try the Harlem 'cor- 
ner ' once more." 

It was agreed to try and repeat the Harlem u corner." 

John put up a million. Leonard Jerome also went into 
the deal. It took five millions to face the Legislature in 
this game, in which they had every opportunity of packing 
all the cards. It was virtually, at first, a silent game of 
whist, at which the Commodore was a noted player. He 
never played with greater skill than this time, except in the 
Hudson " corner," and in both instances he almost mani- 
fested the skill of inspiration. 



114 "corners." 

The members of the Legislature completely lost their 
heads. The old classic maxim, "whom the gods devote to 
destruction, they first make mad," appeared to apply peculi- 
arly to them, in the manipulation of the Harlem " corner." 
Some of them mortgaged their houses and lands to get 
money to sell Harlem "short." They advised all their 
friends that it was such a sure thing that failure was im- 
possible, and brought all of their acquaintances whom they 
could influence into the speculative maelstrom of Harlem. 

In the course of a few weeks, the members of the Legis- 
lature and their friends had sold millions of Harlem to be 
delivered at various periods during the summer, when they 
expected it would go 'way down, probably to 8 or 9, where 
the Commodore had originally bought it. 

They expected, moreover, that the Commodore would have 
appeared at Albany either in person or by his lobby repre- 
sentatives to sue for terms of settlement. They were great- 
ly disappointed. He never left the company of his brokers 
in Wall Street, and persisted in purchasing. The members 
thought he must be mad, or at least in his dotage. He was 
then threescore and ten, the Scriptural limit of human days. 

The Commodore continued to purchase Harlem until he 
had bought — paradoxical as it may seem to the general 
reader — 27,000 shares more than were in existence of Harlem 
stock. 

When the members of the Legislature who set the trap to 
catch Vanderbilt, but in which they themselves were now 
hopelessly ensnared, went into the market to buy for the 
purpose of covering, there was no Harlem to be had. Van- 
derbilt and his brokers had every share of it safely secured 
in their strong boxes. 

The members of the Legislature were paralyzed. They 
could expect no mercy from the Commodore. He owed them 
none, and though a good Christian prior to his death, he 
was then practically a stranger to the doctrine of the great 
Nazarene. "Be turn good for evil," or, " whosoever shall 



"can't pay their board biu<s." 115 

smite thee on thy right cheek, turn to him the other also." 
He was rather inclined to follow the maxim of that practical 
Quaker, who, when smitten on the cheek and asked to turn 
the other, replied, "Friend, thou didst not read far enough. 
It is written, 'pay what thou owest,'" and he knocked the 
fellow down. 

This was the rule of action to which the Commodore rigidly 
adhered in dealing with the Legislature in the Harlem 
"corner." 

When a compromise was mooted to him, the Commodore 
replied, "Put it up to a thousand. This panel game is 
being tried too often." 

No doubt he would have put it up to a thousand and 
totally ruined the members of the Legislature, with the 
Governor and their friends included, only for the over- 
powering appeals of his two trustworthy friends, Leonard 
Jerome and John Tobin. 

Mr. Jerome had no sympathy for the Legislature, any 
more than Vanderbilt had, but he had a patriotic desire to 
take care of the "Street," thus showing the large and compre- 
hensive view of which this able financier is capable where a 
broad speculative question and a variety of diverse interests 
are involved. 

" If you should carry out your threat," said Mr. Jerome 
to the Commodore, " it would break every house on the 
Street." 

The Commodore yielded to that touch of nature that 
makes all the world akin, and under the magnetism of 
Jerome's prudent entreaty, like Pharaoh with the Israelites, 
agreed to let the Legislature go — at 285 for Harlem. 

In one day 15,000 shares matured at this figure. Specu- 
lators who read these lines, just pause and think of it for a 
moment ! The stock that sold at $3 when I made my debut 
in Wall Street in 1857, reached 285 in 1864, and could have 
been put to 1,000. Don't you feel astounded at the possi- 
bilities of speculation I 



lift 

Then, again, think of the one-man power that could ac- 
complish this wonderful feat and prevail against a whole 
Legislature and its Governor, with the choicest assortment 
of "crooked" lawyers in the State, versed in all the arts of 
duplicity and cunning to aid and abet said Legislature and 
its Governor. 

Think of this, and then you will have some conception of 
the astute mind that the Commodore possessed, without 
education to assist it, in the contest against this remarkable 
combination of well- trained mental forces. There can hardly 
be a doubt that the Commodore was a genius, probably with- 
out equal in the financial world. There was hardly any 
achievement of his life which he gloated over with such in" 
effable delight as the cornering of the Legislature. He 
would say, when referring to the matter afterwards : " We 
busted the whole Legislature, and scores of the honorable 
members had to go home without paying their board bills." 
Thus ended the second " corner " in Harlem. 

Many large houses were ruined by the " corner," and a 
host of private speculators lost all they had. Daniel Drew 
came very near being swamped in it, but finally escaped 
with paying a million, chiefly through his influence at court. 

It is unnecessary to speak of the celebrated Erie " cor- 
ners '* here, as I have treated them pretty fully in the life 
and speculations of Drew. 




DANIEL DREW. 



CHAPTER XIY. 

DANIEL DREW. 

Drew, like Vanderbilt, an Example op Gbeat Success 
without Education. — Controlled more Beady Case 
than any man in america. — drew goes down as 
Gould Eises. — "His Touch is Death." — Prediction of 
Brew's Fall. — His Thirteen Millions Vanish. — 
How he caught the Operators in " Oshkosh " by the 
Handkerchief Trick. — The Beginning of " Uncle 
Daniel's " Troubles. — The Convertible Bond Trick. 
— The Corner" of 1866.— Millions Lost and Won in 
a Day. — Interesting Anecdote of the Youth who 
Speculated outside the Pool, and was Fed by Drew's 
Brokers. 

ONE of the most singular and eventful careers in Wall 
Street was that of Daniel Drew, familiarly called " Uncle 
Daniel." This man affords another remarkable instance of 
the possibility of attaining great success by stubbornly fol- 
lowing up one idea, and one line of thought and purpose. 
His life also shows that education is not necessary to suc- 
cess in the acquisition of money, but, as I have attempted to 
show in another chapter, may be a great hindrance. 

This fact is abundantly illustrated in the lives of both 
Drew and Vanderbilt. In fact, everybody who knew these 
two men were of the opinion that with a fair or liberal edu- 
cation they would never have cut a prominent figure as 
financiers. It is also questionable whether either of them, 
with all their ability in other respects, would have been 
capable, with their peculiar predilections for other pursuits, 
of receiving a common school or college education. They, 
probably, had not the capacity for that kind of acquisition. 
Perhaps it might have been impossible for any teacher to 
make Drew pronounce the word shares otherwise than 
"sheers," or convince Vanderbilt that the part of a loco- 



118 DANIKI* DREW. 

motive in which the steam is generated should not be spelt 
phonetically, "boylar." 

It is more than probable that professors in grammar 
would have found it a hopeless task to convince the Com- 
modore that there was anything wrong in the expression, 
"Never tell nobody what yer goin' to do, till you do it," or 
Drew that it was improper to say to his broker, " Gimme 
them sheers," when he desired his stocks reduced to posses- 
sion. Both men seemed to think with the character in 
Shakespeare, that reading and writing, like their other 
attributes, came by nature. They evidently thought that 
their abilities for financiering emanated solely from that 
source, and results largely bore them out in that interpreta- 
tion. Both had supreme contempt for persons of less abil- 
ity than themselves in the speculative arena, yet they were 
terribly jealous of rivals who essayed to compete with them 
in their own peculiar methods of making money. Cunning 
and shrewdness were the leading characteristics of Drew. 
Though illiterate himself, he, however, showed that he ap- 
preciated education in others, by erecting and endowing a 
seminary in his native place. 

Some people who were not inclined to give Drew any 
credit for the finer and more generous and genial feelings 
of man's nature, said that his motive for this endowment 
was merely popularity, and a morbid desire, like that of 
Vanderbilt, to perpetuate his name. 

Another motive, however, less ennobling to man's nature, 
seemed to be the true one. He saw that the religious element 
in society was then influential, and that many religious 
people of his acquaintance were in good circumstances, and 
he sought to ingratiate himself with them in order to make 
use of them in his speculations. 

This appears clearly to have been at the bottom of his 
precious gift of a seminary to his native county. It was a 
curious illustration of retributive justice, if I am right about 
his motive, that he was obliged to default in the payment of 
that gift, with the exception of the interest 



DREW IN THE ZENITH OF PROSPERITY. H9 

Daniel Drew, at one time, could command more ready 
cash at short notice than any man in Wall Street, or prob- 
ably than any man in America. His wealth was estimated 
at thirteen million dollars. He made a very large part of 
this out of his speculations in Erie stock, of which corpora- 
tion he was then managing director and treasurer. Being thus 
on the inside, he was enabled to leave everybody else on the 
outside in the ups and downs of the market, which he him- 
self generally engineered. 

The Street was frequently amazed by fluctuations of 20 
or 30 per cent, in Erie stock, sometimes in the course of a 
day or two, through the able manipulation of Mr. Drew. 

It was a sorry day for Drew when Jay Gould took his 
place in the control of Erie, and it was equally disastrous 
for the Erie property. 

From this period Gould began to grow rapidly to the full 
stature of speculative manhood, while Drew moved as 
quickly in a downward direction, until he found himself 
again at the lowest rung of the financial ladder. It was no 
wonder that he said of Gould, "his touch is death." 

Drew's losses followed one another in quick succession, 
until his thirteen millions had melted away like snow off a 
ditch, and eventually he died in debt and broken hearted. 
His last days stand out as a sad, but eloquent warning to 
the avaricious. And this reminds me of a festive event, the 
chief incidents of which, I think, are worthy of reproduction. 

I remember being at a dinner party ostensibly given to 
the old gentleman when in the very zenith of his financial 
fame and prosperity. It was a kind of mutual admiration 
society, Drew being the king-pin of the social coterie. On 
account of his thirteen millions he was the centre of cring- 
ing admiration, and was by a number of the assemblage 
almost deified. 

As is usual on such occasions, speechmaking was in order, 
the oratorical talent being called out by the toasts as they 
went the round of the board. 



JL20 DANIEI, DREW. 

When it came my turn to speak, I followed suit, to some 
extent, in picking up the thread of the general glorification 
extended to the honored guest, to whom I paid marked 
deference. 

"We are honored," I said, " on this festive occasion, by a 
gentleman of vast wealth, one who can control more ready 
money than any man in America, and be it said to his honor, 
it has all been of his own creation. He is a true represent- 
ative of American thrift and enterprise. His money and his 
genial disposition together combined make all men his 
friends, and I know of only one antagonistic spirit to the 
continued growth of this already marvellous fortune ; but 
that ones, in all probability, may yet work his ruin. I refer 
to our honored guest, Mr. Drew, and his one enemy which I 
have in mind is c Avarice.' " 

In five years from that memorable dinner Daniel Drew 
was a ruined man, and his thirteen millions had vanished 
like the baseless fabric of a vision, leaving nothing but the 
miserable wreck of an avaricious spirit behind. 

The manner in which Drew was supposed to make religion 
the handmaid to speculation was satirically touched in the 
following verses published in the New York Tribune about 
fifteen years ago : 

He was a long, lank countryman, 

And he stoppeth one of two. 
" I'm not acquaint in these yeere parts. 

An' I'm a lookin' fur Danl Drew." 

" I'm a stranger in the vineyard, 

An' my callin' I pursoo 
At the institoot at Madison, 

That was built by Dan'l Drew." 

"I'm a stranger in the vineyard, 

An' my 'arthly wants are few ; 
But I want sum 'p'ints on them yer sheared. 

An' I'm a lookin' fur Dan'l Drew." 

Again I saw that laborer, 

Corner of Wall and New ; 
He was looking for a ferry boat, 

And not for Daniel Drew. 



HE DRESSED UKE A DROVER. 121 

Upon his back he bore a sack, 

Inscribed " Preferred Q. U." 
Some Canton scrip was in his grip, 

A little Wabash, too. 

At the ferry gate I saw him late, 

With his white hat askew, 
Paying his fare with a registered share 

Of that "Preferred Q. U." 

And these words came back from the •' Hackensaeu; r 

" Ef yew want ter gamble a few, 
Jest git in yer paw at a game o' draw, 

But don't take a 'and with Drew." 

Mr. Drew was negligent in his attire, even to the verge of 
slovenliness. He dressed like a drover, having originally 
been employed in that capacity. By the way, the signifi- 
cant term of " watering stock " originated in the practice of 
Uncle Daniel giving his cattle salt in order to create a thirst 
in them that would cause them to imbibe large quantities of 
water, and thus appear bigger and fatter when brought to 
market. Until he met with Gould and Fisk, it was difficult 
for anybody to get the best of him in a deal. 

He was wonderfully prolific in resources for the purpose 
of getting advantage of those who attempted to overreach 
him. 

A good story, illustrative of this trait in his speculative 
character, is told of the time that he was so severely 
squeezed in Northwestern stock. He was greatly grieved at 
his ill luck, while the brokers and operators who had been 
prosperous at his expense were highly elated. They con- 
sidered it a great thing to have caught the wily old Daniel 
napping. He was accordingly made the victim of much 
ribaldry and jesting for several days in Wall Street. Some 
of the young men carried the joke so far as to meet him 
and laugh significantly and irritatingly in his face. He 
seemed to take it all in good part, for he had a happy flow 
of animal spirits, but he had a terrible rod in pickle for 
these young men who were making him an object of ridicule. 



122 DANIEL DREW. 

He watched for his opportunity, and one evening as several 
of them were enjoying themselves in an uptown club, Uncle 
Daniel walked in, sans ceremonie. He appeared to be look- 
ing after some man, and though invited to remain, seemed 
to be in a great hurry to get away, and was apparently ex- 
cited and warm. He seemed to have something important 
on hand. He drew a big white handkerchief out of his 
pocket a few times and wiped the perspiration from his 
heated brow. When he was about to depart there came out 
of his pocket with the handkerchief a small slip of white 
paper which floated around apparently unseen by him, and 
alighted at the feet of one of the bystanders, who quickly 
set his foot upon it. When Mr. Drew made his exit the 
white scrap of paper was instantly scanned. It contained 
these ominous words in his own handwriting : " Buy me all 
the Oshkosh stock you can at any price you can get it 
below par." 

Here was a speculative revelation for the boys, for every- 
body believed at the time that Oshkosh had already gone 
too high, and the point had been circulated to sell it 
" short." The mysterious words written on this erratic 
slip of paper, however, convinced these operators that there 
must be a new deal to give Oshkosh another "kiting." 
There was no time to be lost in taking advantage of the 
unexpected and highly valuable information. They formed 
a pool to purchase 30,000 shares the next day. They 
bought the stock according to pre- arrangement, and a new 
broker of Daniel Drew's was the man who sold it to them- 
They only discovered how badly they themselves had been 
sold by Mr. Drew's handkerchief trick when Oshkosh be- 
gan to decline at the rate of a dozen points a day, and 
Uncle Daniel soon raked in from the jokers and their friends 
more than he had lost in Northwest. 

Mr. Drew first entered the Board of Directors in Erie 
about the year 1852, and remained there until he was 
squeezed out, and almost ruined, in 1868. He held the office 
of treasurer to the corporation. 



THE SPECULATIVE DIRECTOR. 



123 



Drew was born in the town of Carmel, Putnam county, in 
the year 1797, and was three years younger than Vanderbilt. 
As I have intimated above, in early life he drove cattle from 
his native town to New York. He afterward became pro- 
prietor of the Bull's Head tavern in this city. 

He never changed his style of dress from that to which 
he was accustomed to wear when he was a drover, and when 
he was worth thirteen millions, instead of sporting a gold 
headed cane, he went around Wall Street with the handle of 
an old broken umbrella in his hand. While treasurer of 
Erie he used every opportunity to manipulate the stock to 
his own advantage, irrespective of the rights or interests of 
any other person. He was the leading bear of the market 
for many years. Like Vanderbilt, he was interested to 
some extent in steamboats, but he made Erie stock the great 
medium of acquiring his vast wealth. He got the name of 
the speculative director, and at the outbreak of what was 
known as the Erie war he was supposed to be almost 
financially impregnable. 

The " corner " of 1866 was the beginning of Uncle Daniel's 
troubles. Up to that period all had gone merry as a mar- 
riage bell with him, and he was piling up the millions at a 
rate which no other financier or speculator had ever dared 
to imitate. Erie stock was selling at 95 in the spring of 
that year. The company was badly off for money. It made 
application to its treasurer for the needed relief. He was 
ready to serve it in that way at all times, but he wanted 
security for the loan. There were then 28,000 shares of 
unissued Erie stock. The company also claimed the right 
to raise money by the issue of bonds convertible into stock 
at the option of the holder. 

This was an old trick in the management of Erie matters. 
It had saved Jacob Little on one occasion, as I have men- 
tioned in a former chapter, during the earlier history of 
speculation in Wall Street. It was, therefore, not original 
with the Drew management of Erie, as some people have 
supposed. 



124 DANIEI, DREW. 

The 28,000 shares of unissued stock then, and three mil- 
lions of dollars of convertible bonds, were placed in the 
hands of Mr. Drew as security, and he advanced the loan of 
3 J million dollars to relieve the pressing necessities of the 
corporation. 

When Drew found himself thus fortified with the convert- 
ible bonds, he laid another trap for the boys in the Street. 
Erie had been rapidly absorbed for some time, and was very 
strong at 95 with anxious purchasers. The stock was, there- 
fore, becoming very scarce. Mr. Drew had a large number 
of contracts to fill, and operators were wondering where he 
would get the stock to settle. Many of them were laughing 
in their sleeves at his impending embarrassment, as they 
had done on a former occasion, and were in ecstacies of de- 
light at the idea of the terrific "squeeze" which the old man 
was about to experience. When he seemed on the very 
horns of this dilemma, upon which the rampant bulls thought 
they would successfully impale him, he converted his three 
million bonds into an equivalent amount of stock, threw 58,- 
000 shares on the market, met all his contracts, and fed the 
voracious bulls with all they wanted. 

Hungry as the Street had been for Erie, this was an over- 
dose that it was utterly incapable of digesting. The bulls 
were paralyzed, and before they could rally their broken 
ranks from the demoralizing effects of this unexpected sortie 
from the stronghold of Erie, the stock had declined from 95 
to 50, wiping out the broadest margins and putting the whole 
army of bulls, reserve forces and all, to utter rout. 

Millions were lost and won in a day in this deal. 

This was regarded as a grand coup d'etat, and one of 
Drew's most brilliant exploits in operating. In fact, at the 
time, it seemed to throw every prior operation of this na- 
ture totally in the shade, and the other leading operators of 
the street were blue with envy, green with jealousy, and 
raging mad over their losses and the way they had been 
entrapped and almost ruined by the deeply-laid scheme of 



AMUSING AN AMATEUR SPECULATOR. 125 

the Erie treasurer. Drew was despised, feared and revered 
on account of this unparalleled achievement. He then es- 
sayed to rest on his oars for a short time, but his period of 
repose was but short-lived. 

There was a little side-show in connection with the ma- 
turing of the operations in the pool just referred to, which 
is so characteristic of Daniel's methods that it is worth re- 
lating. There was a young man in the Erie pool, but not 
in the wheel-within-the-wheel in that sacred circle, who 
imagined that the purpose of the pool was to put Erie stock 
up, and accordingly he borrowed money from Uncle Daniel, 
his credit being good and having money in the pool funds, 
to purchase Erie. The accommodating treasurer not only 
lent him the money, but his private brokers sold the young 
man the Erie stock desired. He was duly fed from day to 
day with the quantity which his speculative appetite craved. 
After the slump just referred to, this unsophisticated youth 
and some other members of the pool among his friends, 
went to Uncle Daniel and requested him, as manager of the 
pool, according to the programme supposed to have been 
agreed upon, to put Erie again on the line of advance, in 
order that the young man and his friends might get in and 
out again, so as to cover their recent losses. 

Mr. Drew, however, coolly informed them that the pool 
had no Erie stock and did not want any, and was not pre- 
pared to trade in that security any more at that time. 

" I sold all our Arie at a profit,'' said Uncle Daniel, " and 
am now ready to divide the money." 

So this youthful member had the felicity of discovering 
that while he was speculating on his own account for a rise, 
Uncle Daniel was looking after his interests in another direc- 
tion, and had realized at the most opportune moment. 

Thus this amateur operator, whom Uncle Daniel had 
amused, without letting him into the secret, in the way de- 
scribed, got nearly enough of money back to pay the loss 
he had sustained experimenting outside the pool on his own 



126 DANIEL DREW. 

account, and upon his own independent but fallacious judg- 
ment. 

If he had not speculated outside, he would have had very 
handsome profits from the pool, but he would not have 
obtained the useful experience which was connected with 
his losses, and the independent attitude he was ambitious 
to assume in speculations. 



CHAPTER XV. 

DREW AND VANDERBILT. 

Vanderbilt Essays to Swallow Erie, and Has a Narrow 
Escape from Choking.— He Tries to make Drew 
Commit Financial Suicide. -Manipulating the Stock 
Market and the Law Courts at the Same Time. — At- 
tempts to " Tie Up" the Hands of Drew. — Manufac- 
turing Bonds with the Erie Paper Mill and Print 
ing Press. — Fisk Steals the Books and Evades the 
Injunction. — Drew Throws Fifty Thousand Shares 
on the Market and Defeats the Commodore. — The 
" Corner " is Broken and Becomes a Boomerang. — 
Vanderbilt's Fury Knows no Bounds. — In his Rage 
he Applies to the Courts.— The Clique's Inglorious 
Flight to Jersey City. — Drew Crosses the Ferry 
witf Seven Millions of Vanderbilt's Money. — The 
Commodore's Attempt to Reach the Refugees. — A 
Detective Bribes a Waiter at Taylor's Hotel, who 
Delivers thr Commodore's Letter, which Brings 
Drew to Terms.— Senator Mattoon gets " Boodle " 
from Both Parties. 

ONE of the most interesting episodes connected with the 
speculative life of Drew, in the somewhat sensational his- 
tory of Erie affairs, was the interposition of Commodore Van- 
derbilt in one of the famous deals of the Erie clique. His ob- 
ject was to swallow up the corporation, and it came pretty 
near swallowing him. He was only saved by the skin of the 
teeth, after one of the most prolonged and desperate finan- 
cial struggles of his life. 

In order to explain clearly the manner in which the Com- 
modore became involved in the Erie matter with Drew and 
his partners, it will be necessary to take a brief resume of 
the history of a few of his other prominent deals, more fully 
dwelt upon elsewhere. 

In 1860 Harlem stock had sold as low as eight or nine 



128 DREW AND VANDERBII,T. 

dollars a share. In January, 1863, when Vanderbilt got 
full control of the property, the stock had advanced to 30, 
and in July of the same year it had bounded to 92. In 
August, when the " corner" was effected, it went to the re- 
markable figure of 179. 

It was put through a similar operation the succeeding 
year, and the stock, which sold in January below 90, was 
settled for in the following June at 285. Drew had been 
drawn into one of these transactions, and his losses reached 
nearly a million. 

Vanderbilt's prospects with the Harlem property were 
seriously menaced by the competition of the Hudson Eiver 
tiailroad. He bought up the competing line, and thus de- 
stroyed the competition. He made this purchase when the 
stock was at par. He soon manifested his superior power 
in management, and displayed his skill in the art of " water- 
ing," which he had invented. He had the stock advanced to 
180 in a very short time. 

Seeing his great success with these two properties, through 
his novel and unique methods of financiering, the managers 
of the New York Central, thinking that discretion was the 
better part of valor, and perceiving that they could not hold 
out against the edicts of manifest destiny very long, offered 
their property to him almost at his own price, which he 
very cordially accepted, approving their good judgment and 
keen perception. 

He obtained full control of New York Central early in 
1867. As soon as this triple amalgamation was complete 
he set his insatiable and avaricious heart upon Erie, and 
essayed to compass his designs and effect his purpose of 
reducing it to possession through the speculative machinery 
of Wall Street. 

It was through this channel that he had obtained Hudson, 
and in defiance of the scientific maxim that lightning never 
strikes twice in the same place, he was inspired with full 
confidence in his ability to " scoop " Erie in the same man- 



129 

ner. He tried first to arbitrate and consolidate, but his 
efforts in that direction failed. 

With all his marvellous foresight and almost unerring 
judgment in speculative affairs, the Commodore was greatly 
at fault in his calculation regarding the magnitude of the 
task he had now undertaken in Erie. He had no idea of 
the immense volume of the stock which, after the speculative 
battle began to rage, seemed to spring out of the ground, 
spontaneously, as the reserve troops of Wellington were said 
to appear to do in the eyes of Napoleon when the struggle 
waxed warm at Waterloo. He had to contend with the 
ablest generals in speculation and finance that ever Wall 
Street had produced. His first bold, flank movement was 
an attempt to " corner " Drew. He knew how to manipulate 
the courts almost as well as the Erie King did. According- 
ly, he made use of the services of Frank Work to ob- 
tain an injunction from Judge Barnard, of Tweed Eing 
notoriety, restraining Drew from the payment of interest on 
3$ million bonds, pending an investigation of his accounts 
as treasurer of Erie. This was followed up in a few days 
by another application to the court for the treasurer's remo- 
val from office. 

These measures were resorted to by Vanderbilt to prevent 
the issue of this stock, into which these 3 J million bonds 
were convertible, and thus enable him to get a " corner " in 
the stock with greater facility. He thus attempted to make 
the court instrumental in forcing Drew into a position where 
he would be obliged to commit financial suicide. 

The Erie Eing had managed to get legally around what in 
reality was an over-issue of Erie stock and bonds in the fol- 
lowing subtle manner : 

There was a statute of New York which authorized any 
railroad to create and issue its own stock in exchange for 
the stock of any other road under lease to it. The Eing 
had obtained the Buffalo, Bradford & Pittsburg road, 
which was comparatively worthless, for carrying out this 



1/ 



130 



DREW AND VANDERBII/T. 



scheme. The Erie management then set about supplying 
themselves with the amount of Erie stock required, by leas- 
ing their own road to the road of which they were directors. 
They then created stock and issued it to themselves in ex- 
change under the authority vested in them by law. 

The nominal price of the road with which they worked 
this game of legerdemain was $250,000. They issued bonds 
in its name for two millions of dollars, payable to one of 
themselves as trustee. 

Vanderbilt, before he could get a " corner " in Erie, had 
to place a limit to the issue of the stock. Otherwise he 
would have been throwing away millions, like pouring water 
into a sieve, in his attempt to make a " corner.'' 

Drew was enjoined by the Commodore to return to the 
Treasury 68,000 shares of the capital stock of Erie. This 
was the amount that was said to remain in the unsettled 
transactions of the Erie corner of 1866. This was the 
sword of Damocles which Vanderbilt had suspended over 
Drew's devoted head. 

Vanderbilt thus undertook to play the double game of 
manipulating the courts and the stock market at the same 
time, and against wily opponents, who were experts in both 
operations. 

There were at this time three competitors for the posses- 
sion of Erie in the field. The Drew party, the Vanderbilt 
party, and the Boston, Hartford and Erie party] Drew had 
tried to appease Vanderbilt to some extent, and had an in- 
terview with him at Vanderbilt's own house prior to the 
election of the Erie directors. He agreed to "let up" on 
Vanderbilt, and offered him greater swing in purchasing 
Erie, while, on the other hand, Vanderbilt consented not to 
press the proceedings in court against Drew. 

Before this, the Boston party and Vanderbilt had 
been fixing matters to oust Drew from the Erie director}*". 
Now, Vanderbilt changed his tactics, and resolved to let 
Drew remain. The Boston party was with him, but to keep 



THE COMMODORE ON THE WAR PATH 131 

ap the appearance of what had been formerly determined, 
the new board was to be elected ostensibly without Drew, 
and a vacancy created afterwards by which he could be 
chosen in the board. This method of whipping the Devil 
around the stump was adopted to put public opinion off its 
guard, and help to forward Vanderbilt's purposes of con- 
solidation. The election scheme was successfully effected, 
but the ruse, though well conceived, fell far short of accom- 
plishing its designs. 

There were wheels within wheels during this speculative 
deal. Drew and Vanderbilt entered into a secret alliance 
to exclude the Boston party, who was Vanderbilt's ally. 
The new board was elected, leaving Drew out. This was a 
surprise to Wall Street, but a greater surprise was in store 
for it when a vacancy was created the next day, and Drew 
was re-elected to the Erie Board of Directors. The Street 
was confused and confounded, and at a loss to know how to 
act, and the Boston party was groping around to find out 
where it stood. Frank Work was elected to the Erie 
Board in the Vanderbilt interest. A pool was then formed 
to put up Erie, as it was in a very depressed condition. 
Drew was to manage the pool and manipulate the market. 

The proposed plan for consolidating with the Vanderbilt 
interests failed because the Erie people said that the great 
railroad king would only consent to give them one-third of 
the earnings, while they contributed more than half to the 
pool. So, when this scheme collapsed, Vanderbilt went on 
the speculative war path, and determined to snatch Erie 
from the hands of the Bing in the way he had obtained 
Hudson. He began his operations about the middle of 
February, 1868, and pursued his policy in the courts for the 
purpose of limiting the apparently unlimited supply of Erie 
stock. 

In the leasing process above referred to with the Buffalo, 
Bradford & Pittsburgh, the Erie clique added $140,000 a 
year to its income. 



<32 DREW AND VANDERBII/T. 

Mr. Work got an additional injunction to prevent Erie 
from issuing stock in addition to the 251,058 shares which 
had appeared in the previous report of the road, and for- 
bidding a guarantee by Erie of the bonds of any other road, 
and Drew was further restrained from any transactions in 
Erie until he should return the 68,000 shares of capital 
stock to the treasury. 

It will thus be seen that Vanderbilt had taken very rigid 
measures to " tie up " the hands of the veteran speculator. 
The case was set down for hearing in the court of the 
immaculate Judge Barnard, on the 10th of March. When 
Yanderbilt thought he had everything fixed to force Drew 
to ruin himself by the return of these shares, which would 
enable Yanderbilt to effect his " corner," he was checkmated 
by a counter injunction issued in the interest of the Erie 
people by Judge Balcom, of Binghamton, which stayed all 
proceedings in Barnard's court. 

Bichard Schell then applied to Judge Ingraham and got 
out another injunction in the interest of the Vanderbilt 
party, staying all proceedings before Judge Balcom. 

In the meantime the Erie directors were busy preparing 
their new issue of stock, despite the injunctions, in order 
that the bulls of the Vanderbilt party might be generously 
fed with Erie when the opportunity should arrive. 

The Executive Committee of Erie resolved to issue bonds 
for improvements, extensions and steel rails. The bonds 
were convertible into stock at not less than 72J. Five mil- 
lions of these were manufactured by the Erie paper mill 
and printing press, to be exchanged for Vanderbilt's good, 
solid cash. M ?C 

A great difficulty presented itself at this juncture, which, 
even to the majority of clever speculators, would have been 
insurmountable. The genius of "Jim" Fisk was called in 
to cut the Gordian knot. The certificates of the new Erie 
shares were in the hands of the secretary of the company, 
but he was enjoined from issuing them. They had been 



GONE TO JERSEY WITH SEVEN MIWJONS; 133 

made out on Saturday night. On Monday the secretary 
directed a messenger, in the Erie office in West street, to take 
the books containing the certificates to the tranfer office in 
Pine street. The messenger took the books and walked out. 
He was hardly a minute absent when he returned, apparently 
frightened, without the books. He stated that Mr. Fisk, 
who had been standing at the door, took the books from him, 
and ran away with them ! 

The certificates were then where no injunction could 
molest them. The next day the convertible bonds were 
found upon the secretary's desk. In a day or two after- 
wards the certificates appeared in Wall Street. An order 
was obtained from Judge Gilbert enjoining all the previous 
orders of that legal luminary, Judge Barnard.^Mr. Drew 
then threw 50,000 shares of Erie stock on the market. The 
boldness of the operation threw the Vanderbilt brokers off 
their guard, for it never struck them for a moment that 
Drew would risk contempt of court, and use the new issue 
of Erie in the face of an injunction, so they eagerly 
devoured the fresh bait before they got time to examine the 
quality of it or suspect its origin. 

Erie had opened at 80, and advanced to 83. When the 
facts became known the stock broke, and declined to 71 ; but 
under heavy purchases by the Vanderbilt party, soon recov- 
ered to 78. The " corner,'' however, was broken by the large 
blocks which Drew had thrown on the market, and Vander- 
bilt was signally defeated, and had a narrow escape from 
being completely swamped. The corner proved a boomerang 
to Vanderbilt. In his wrath he again applied to the 
courts. As the result, the Erie clique were obliged to fly 
and take refuge in Jersey City. Drew crossed the ferry 
heavily loaded with a big carpet bag, which contained seven 
millions, which had recently changed hands from Vander- 
bilt to himself in the cornering operation. 

Gould and Fisk decamped by different routes. When the 
party had taken refuge in " Fort " Taylor (Taylor's Hotel), 



134 DRKW AND VANDERBII/T. 

safe from the laws of New York, they determined that no 
papers should be served upon them, and gave strict orders to 
the host that they would not receive anything in the shape of 
letters or notes. Communications of all kinds were prohib- 
ited except through persons well known to the clique, and 
the waiters at the hotel were strictly enjoined to observe 
this rule, on pain of being discharged. X 

While Yanderbilt was working hard to reach the refugees 
through the courts, the Legislature and his detectives, he 
discovered a method of communicating with Drew in spite of 
the precautions with which the latter was surrounded. The 
Commodore's scheme would have done honor to a first-class 
Nihilist of the present day. He instructed a person in his 
service to play temporary detective, to go to the Taylor 
Hotel in the garb of a commercial traveler from the Far 
West, and to watch the movements of Drew, so as to get a 
note slipped into his hand in a way that he would be certain 
to read it. 

The amateur detective watched for a day or two, and saw 
that his only chance of success was when Drew was at lunch, 
and that the person who waited on him must hand him the 
note. He saw the waiter, and told him what he wanted, and 
that when he should be discharged the Commodore would 
find him a better place. 

The waiter agreed to hand Mr. Drew the note. Drew was 
enraged, sent for the host, and the waiter was instantly dis- 
charged, only to enter Yanderbilt' s service, according to 
agreement, at much higher remuneration. The note of the 
Commodore, however, had the desired effect. What that 
note contained, probably, nobody but Vanderbilt and Drew 
ever knew. Though the friends of Drew attempted to 
frighten him from going by arousing his suspicions of being 
kidnapped, he came over to New York on the following Sun- 
day and had an interview with the Commodore. The matter 
was fixed up between them, and while Gould and Fisk were 
fighting Vanderbilt tooth and nail at Albany, and Gould 



DREW APPEASES VANDERBII/T. 135 

was arrested and arraigned for contempt of court and other 
high crimes and misdemeanors in the eyes of the Vander- 
bilt lawyers, Drew was left unmolested to pursue the even 
tenor of his way. 

As treasurer of Erie, however, Drew took an active part in 
the progress of legislative matters. He was the first to see 
that Senator Mattoon, who was chiefly instrumental in or- 
ganizing the Investigating Committee, wanted tangible 
recognition of his services before the Committee made its 
report He thought he was using Mattoon, but the Senator 
used him, and gave his casting vote in favor of Vanderbilt, 
whom he used also, after the most approved method of Albany 
legislators. Mattoon was also found on the winning side at 
the end of the legislative farce, when the bill in favor of the 
Erie clique and its over- issue of stock was passed, and no 
doubt got his fair share of the half million with which Drew 
fortified Gould from the Erie treasury when this gentleman 
went to Albany to conduct the war in the Legislature against 
Vanderbilt concerning the extra issue of Erie stock. 



CHAPTEK XVI. 

DREW AND THE ERIE "CORNERS." 

A Harmonious Understanding with the Commodore. — 
How the Compromise was Effected. — An Interest 
ing Interview with Fisk and Gould in the Commo 
dore's Bed-Eoom. — How Kiohard Schell Eaised the 
Wind for the Commodore. — Drew's Share of the 
Spoils. —He Tries to Ketire from Wall Street, but 
Can't. — The Settlement Cost Erie Nine Millions. — 
Gould and Fisk " Water " Erie again, to the Extent 
of Twenty-three Millions, but leave Drew out. — 
"Uncle Daniel" Eeturns to the Street. — He is In- 
veigled into a Blind Pool by Gould and Fisk, 
Loses a Million and Eetreats from the Pool.— He 
then Operates Alone on the "Short" Side and 
Throws Away Millions. — He Tries Prayer, but it 
"Availeth Not."— "It's no Use, Brother, the Mar- 
ket Still Goes Up." — Praying and Watching the 
Ticker. — Hopelessly "Cornered" and Euined by his 
Former Pupils and Partners. 

ABOUT the middle of April Drew emerged from his re- 
treat in Jersey City, and appeared openly in Wall Street, 
apparently without any fear of arrest. Other members of the 
Erie clique had gone through the formality of purging their 
contempt of court, but had not made their peace with the 
Commodore, and things went forward without any special 
interruption or excitement until July, when a settlement was 
made with Vanderbilt. 

It was agreed that the Commodore should be relieved of 
50,000 shares of Erie stock at 70, for which he was to re- 
ceive $2,500,000 in cash, and $1,250,000 in bonds of the 
Boston, Hartford & Erie at 80. It was further stipulated 
that he was to receive $1,000,000 for the privilege of calling 
on him at any time within four months for the remaining 
50,000 shares of Erie at 70. He was allotted two seats in 



138 drew and The Erie 

the Erie Board of Directors. All suits between the two 
high contending parties were to be dismissed and all 
offenses whatsoever relating to the case, in the language of 
the law, were to be condoned. 

The manner in which the compromise was effected is not 
the least interesting part of the famous deal in Erie. Some 
time after Drew had got through his famous Sunday evening 
interview with the Commodore, paving the way for his 
partners, by weeping and showing other manifestations of 
deep contrition on account of his inglorious flight to Jersey 
City, Gould and Fisk came over early one morning to see 
the Commodore at his residence in Washington Place. Eisk 
told the story of meeting the Commodore with great 
unction, in his bold, brazen and lively manner. i( Gould 
wanted to wait," said Eisk, " until the Commodore should 
have time to get out of bed, but I rang the bell, and when 
the door was opened I rushed up to his room. The Commo- 
dore was sitting on the side of the bed with one shoe off and 
one shoe on. He got up, and I saw him putting on the other 
shoe. I remember that shoe from its peculiarity. It had 
four buckles on it. I had never seen shoes with buckles in 
that manner before, and I thought, if these sort of men 
always wear that sort of shoe, I might want a pair. He said 
I must take my position as I found it ; that there I was, and 
he would keep his bloodhounds (the lawyers) on our track; 
that he would be damned if he didn't keep them after us if we 
didn't take the stock off his hands. I told him that if I had 
my way, I'd be damned if I would take a share of it ; that he 
brought the punishment on himself and he deserved it. This 
mellowed him down. I told him that he was a robber. He 
said the suits would never be withdrawn till he was settled 
with. I said (after settling with him) that it was an almighty 
robbery ; that we had sold ourselves to the Devil, and that 
Gould felt just the same as I did." 

Among the friends who adhered to the Commodore in the 
trying hour of the " corner," besides those mentioned, were 



the; commodore nearly burst/ 



139 



William Heath, Kichard Schell and his brother Augustus, 
and Eufus Hatch. Richard Schell was highly practical and 
remarkably shrewd in the aid which he offered the Commo- 
dore to obtain money for the speculative fight. He man- 
aged, through his tact and shrewdness, to get loans on Erie 
after the banks had absolutely refused to lend, on account 
of the over-issue of the stock. After this refusal, he made 
inquiry at the banks, and found that most of them had New 
York Central stock. He then went to a bank and said : "If 
you don't lend the Commodore half a million on Erie at 50, 
he will put Central down to 50 to-morrow, and break half the 
houses on the Street. You know whether or not you will be 
among them." 

The threat was repeated at other banks, and, in almost 
every instance, had the desired effect, and the Commodore 
was supplied with the sinews of war, but he was only throw- 
ing away his ammunition. 

The Erie stock from the inexhaustible fountain of over- 
issue was supplied to him without stint, and his attempts to 
" corner " the clique were absolutely futile. 

While these gamesters were feeding the Commodore with 
this extemporized stuff to order, Fisk said : " If this printing 

press don't break down, I'll be d d if I don't give the old 

hog all he wants of Erie." 

The printing press did not break down, but did its work 
well until the Commodore was nearly " burst," and had it 
not been for his indomitable courage and the hold he had 
acquired on the courts, he would have been bankrupt. His 
escape seemed almost a miracle to the people of Wall 
Street, and Gould and Fisk were not less surprised that they 
had met a foeman worthy of their steel. In spite of the fact 
that he spilled over seven millions like water, the Commo- 
dore managed to sustain the market through it all, and pre- 
vented a crash that, in its local effects, at least, would have 
been as disastrous as that of Black Friday. 
\y Certain innocent holders who had been badly crushed in 



140 DREW AND THE ERIE 

the collision between the great leaders received a financial 
emollient for their lacerated feelings, amounting in the ag- 
gregate to $429,250. The Boston party, represented by 
Mr. Eldridge, was to be relieved of five millions of its 
precious Boston, Hartford & Erie bonds, receiving there- 
for four millions of Erie acceptances. 

Thus, the settlement in full cost Erie about nine million 
dollars. The Erie stock and bondholders were saddled with 
this liability in defiance of law and justice. v 

Gould and Fisk pretended to be opposed to the settle- 
ment, leaving the public to infer that it was all the work of 
Drew with Yanderbilt. However this may have been, it 
was probably the best thing the others could have done to 
relieve themselves of their various complications at the 
time. No doubt the Vanderbilt note to Drew, for which the 
waiter was discharged from Taylor's Hotel, was at the bot- 
tom of the whole settlement. 

Drew was left to enjoy his share of the fruits of the 
" corner," which netted seven millions, except that he had 
to pay into the Erie treasury the trifling item of $540,000 in 
discharge of interest and all claims or causes of action 
which might be presented against him by the Erie Com- 
pany. The Erie Bailway fell to the lot of Gould and Fisk 
as their share of the spoils growing out of the entente cordiale. 

Drew then retired from Wall Street in the same way that 
Gould has so often retired since that time, except that Drew 
had probably an honest intention so far as it was possible 
for him to have such a conception of leaving the Street for- 
ever, but it would seem that he had not the power to do so. 
Once in Wall Street, always in Wall Street. It is like the 
doctrine of the final perseverance of the saints, as laid down 
in the Westminster Confession of Faith. It is impossible 
to get out of it when the speculator gets fairly into its fas- 
cinating grasp. 

Drew might have enjoyed life and the consolations of 
religion on the few millions he had left if he had retired, io 



A 



THE COMMODORE ON THE WAR PATH. 141 

company with his Bible and Hymn Book, to some lovely, 
secluded spot in the peaceful vales of Putnam county ; but 
he was under the infatuation of some latent and mysterious 
force or attraction, the victim of some potent spell, like the 
one in whose weird grasp Nancy Sykes was firmly held when 
she essayed to get away from the murderous " Bill," as de- 
scribed by Dickens in Oliver Twist. 

Drew came back to Wall Street, and saw and was van- 
quished, quite unlike Caesar. 

When he returned to the ' Street" after a few months ab- 
sence, the scene was greatly changed. His two pupils had 
shown themselves to be such apt scholars, that in the in- 
terim they had exceeded the wildest dreams of avarice that 
ever their able preceptor had conjured up or inculcated.'" In 
four months Gould and Fisk had inflated the capital stock 
of Erie from 34 millions to 57 millions. < No doubt, Uncle 
Daniel was astounded at their progress, and his feelings can 
be better imagined than described when, in the presence of 
this marvellous increase of wealth, he reflected that he was 
no longer treasurer of Erie, and had neither lot nor part in 
its unprecedented prosperity. 

His natural propensity to operate, however, was still 
strong, but when he again tried his hand at speculation, it 
seemed to have lost its cunning, and he felt almost as much 
disappointed as Kip Van Winkle did when he awoke in 
Sleepy Hollow, after his twenty years' nap, and began to 
examine the changed aspect of the country in the vicinity of 
Irvington, now Gould's country seat. 

The speculative tactics in operation had been changed, 
and he soon found that it was a losing game to go on the 
bear side of the market. He was invited into the pool by 
his old partners, to have a little practice at the popular game 
of spider and fly. Drew had been the spider for a long 
time who had inveigled the unwary flies from every direc- 
tion into his insidious net. He was now asked to assume 
the role of a fly, while his former pupils played spiders. In 



142 DREW AND THE ERIE " CORNERS.' ' 

plain terms, lie was coolly requested to go into a " blind 
pool " in Erie, deposit four millions, shut his eyes and open 
his mouth, leaving the Erie sharpers to put taffy or candy 
into it, just as they pleased. 

He was no longer to have the privilege of pulling the 
wires, nor the wool over other people's eyes. On the con- 
trary, he was to be one of the puppets that should dance to 
the music of Gould and Fisk, and let them pull the wool 
over his eyes. He was not to ask any questions, but pay 
his money and take his choice, that is to say, whatever 
Gould and Fisk chose to give him. The terms were rather 
humiliating, and on reflection, Uncle Daniel revolted. He 
did not see the point of paying the piper without having 
the privilege of choosing the tune. He, therefore, withdrew 
his funds after losing a million, and undertook the task of 
bearding these two young lions in their den — the den which 
he had constructed for them, and the two young lions which 
he had so carefully nurtured to destroy him. They were 
very wroth with him on account of what they regarded as 
his treachery, which virtually consisted in his refusal to be 
totally devoured by them. The fact is, however, Daniel 
could not have been true to any one, any more than they. 
"Can the Ethiopian change his skin, or the leopard his 
spots?" 

After considering the matter prayerfully, as he always 
did in such emergencies, he resolved to operate alone, and 
the oracle told him to go on the short side. It was evident 
that the Gods had doomed him to destruction, so he rushed 
in madly to sell the market, which moved persistently up- 
ward. 

In this emergency he took counsel of a Christian brother, 
who advised him to pray. He tried hard to pray, but his 
irresistible desire to keep constant watch on the tape of the 
ticker, to see the quotations, evidently distracted his devo- 
tions. This was probably the first time that he lost faith in 
the power that moves the arm that moves the world. He 



HOW DREW WAS "CORNERED." 143 

went to his Christian brother with tears in his eyes, saying: 
"It is no use, brother; the market still goes up." And 
Uncle Daniel ceased to pray, and despairingly fixed his at- 
tention on the ticker. 

Y During November, Drew contracted for the delivery of 
70,000 shares of Erie at current prices. It was then in the 
vicinity of 38. He proceeded on this line of operation un- 
til he was hopelessly " cornered." He then applied to the 
court. Application was made for an injunction in the name 
of August Belmont, but Gould and Fisk offset it by apply- 
ing for another injunction to their faithful Barnard. That 
upright Judge not only granted an injunction restraining all 
suits brought against his two eminent proteges, but ap- 
pointed Gould Beceiver of Erie. He also gave authority to 
the directors of Erie to use the funds of the corporation to 
purchase and cancel 200,000 shares of stock, the legality 
of whose issue had been questioned, at any price less than 
the par value, without regard to the rate at which it had 
been issued. 

Gould and Fisk had issued these shares in the bear in- 
terest at 40, ran the stock down to 35, and now obtained the 
power to purchase it back at par in the bull interest. This 
they did by the authority and permission of a Judge of the 
Supreme Court, in spite of the law prohibiting members of 
corporations to deal in their own stock. So these two great 
manipulators "cornered" their old friend and teacher, 
Drew, by legally over-riding the law 

Erie became scarce after this skilful movement was per- 
formed, and was selling at 47. Drew made desperate at- 
tempts to cover at this price, but the stock ran up to 57 
between Monday and Wednesday. Wall Street was in a 
terrible ferment, and, as the newspapers say, the greatest 
excitement prevailed. Erie made still another leap and 
reached 62. It was evident that it was bound to keep on 
the upward grade, and there was no apparent relief for 
Drew, at least for two or three days, when an incoming 



144 DREW AND THE ERIE " CORNERS.* ' 

steamer was expected to have a considerable amount of Erie 
on board. It was manifest, however, that by that time Drew 
would have reached the end of his millions, and probably 
most of his credit would have vanished with his own filthy 
lucre. His oppressors were bearing down upon him with 
all their might, and were evidently determined to make 
short work of him. 

The struggle waxed hotter as the hour of three in the 
afternoon approached, and these two young lions of specu- 
lation were determined to crush the old bear unmercifully 
and effectually. 

When Drew was apparently on the very brink of utter 
financial destruction, and almost at the close of the market, 
two events happened that preserved him from total annihil- 
ation. There had been 300,000 shares of Erie issued in ten 
share lots, which the operators thought were safely secreted 
in London and Amsterdam. When the stock reached 60 
these ten- share lots began to come out. It turned out that 
most of them had never left home, but were securely held 
by tradesmen, mechanics, grocers and small bankers and 
brokers. They were thrown on the market with great 
rapidity to realize handsome profits, and the efforts of the 
clique to absorb them before they got into the hands of 
Drew, made serious inroads on the reserve funds of the 
champion operators. As troubles never come singly, at 
this new juncture the banks refused to certify their checks. 
Drew w as, therefore, enabled to make good his contracts 
at 47, but speculatively speaking, he was ruined. He came 
pretty near bringing down his desperate assailants, however, 
in his sad and frightful fall. The stock then fell to 42, and 
Erie became a drug in the market. The victors had got the 
spoils, but they paid dearly for them, and had come 
pretty near being destroyed in the moment of their 
triumph. They had purchased their Erie at " corner " prices, 
and they were obliged to carry it, for nobody wanted it. 
Added to this Erie was struck from the Board for a time, ")C 



GOUI.D AND FISK ARK RKI.KNTl.KSS. 145 

and had it not been for the gullibility of our English 
cousins, this stock would have ceased to be a disturbing 
element in the market for a great while longer. 

Although old Drew was badly treated, yet there was little 
sympathy for him, since he had merely become the victim 
of his own avarice, vacillation, treachery and scheming to 
catch others in the same net. 

He could not justly complain of his former partners, and 
Fisk told him so, for their methods of operation, and the 
immense inflation of the Erie stock by which he was ruined 
had been accomplished by the machinery which he, himself, 
had set in motion, only his ci-devant colleagues had improved 
upon it, and had received various new patents on inventions 
and improvements, which they had joined to the old one 
invented by " Uncle Daniel," making one of the best com- 
binations for the purpose of creating and working "corners" 
that had ever been devised in Wall Street. 

But the unkindest cut of all was the way in which Fisk 
taunted him, on the eve of his crushing defeat, with the ab- 
surdity of his complaints about the management of Erie 
matters. 

"You should be the last man," said this worthy pupil, 
sneeringly, to his dear old preceptor, " that should whine 
over any position in which you may be placed in Erie." 

It was a sad truth, heartlessly uttered by the generous 
" Jim." Drew had no mercy on others, and could not ex- 
pect to be shown any of that " twice blessed quality" tow- 
ards himself. 

The private scene in the Erie office between old Drew and 
Fisk and Gould, just prior to their final and victorious 
charge upon him, was deeply pathetic, yet none of the three 
showed more conspicuously that they were destitute of that 
proverbial honor among "boodlers'' than Drew himself. 
He had secured Vanderbilt to assist him in the courts, and 
also in the market, against the machinations of the Erie 
clique, and then, turning around, he went straight to Gould, 



146 DREW AND THE ERIE " CORNERS." 

and to him betrayed his ally and the plans he had arranged 
with him, expecting mercy from his old colleague by this 
dastardly act of humiliation and deception. 

He must have lost his head at this crisis, for he ought to 
have known Gould better. He begged and pleaded with 
Gould and Fisk, and was ready to throw himself at their 
feet. He implored them to join him, with the remnant of 
his fortune, in giving the old paper mill another turn to 
grind out more Erie stock, that he might be permitted to 
emerge from that cruel " corner " in which he was placed 
like a scorpion girt by fire, brooding over his guilty woes. 

But his pupils proved that they had profited only too 
well by his instructions. Just as he would have acted under 
similar circumstances, they were perfectly relentless. They 
seemed to be a double incarnation of Shylock personified, 
or two Dromios bereft of conscience and human sympathy. 
Drew had no Daniel but himself, to come to judgment. 
There was no fair Portia to plead his cause, and if there had 
been such an angelic creature in the case, though she might 
have " broke up " Fisk, it is almost certain that Gould would 
have successfully resisted her charms. 

When Drew saw they were implacable he bade them good 
night, and with the courage of despair returned to the charge 
in Wall Street the next morning, with the results which have 
been briefly related. He lost nearly two millions in that 
fatal struggle. 



CHAPTEE XVII. 

INTERESTING EPISODES IN DREW'S LIFE. 

Incidents in the Early Life of Drew, and How he Began 
to Make Money. — He Borrows Money from Henry 
Astor, Buys Cattle in Ohio and Drives them oyer 
the Alleghany Mountains under (treat Hardship 
and Suffering. — His Great Career as a Steamboat 
Man, and his Opposition to Vanderbilt. — His Mar- 

BIAGE AND FAMILY. — He BUILDS AND ENDOWS BELIGIOUS 

and Educational Institutions. — Eeturns to his Old 
Home after his Speculative Fall, but can Find No 
Best so Far away from Wall Street.— His Hopes, 
through Wm. H. Vanderbilt, of another Start in 
Life. — His Bankruptcy, Liabilities and Wardrobe.— 
His Sudden but Peaceful End. — Characteristic 
Stories of his Eccentricities. 

1HAD intended at first to give only a sketch of the salient 
points in the speculative career of Drew, but, on re- 
flection, I find that the lives of great men all remind us that 
people want to know a great deal of minutiae concerning 
men who have made their mark in this world. Our enter- 
prising newspapers are encouraging this laudable curiosity 
more and more every day. So in the case of Drew, I must 
try to furnish answers to questions that may be asked about 
him in order that popular expectation may not be disap- 
pointed. I shall endeavor to anticipate what the reader 
may naturally want to know when he comes to the end of 
Drew's great speculative ventures. One of these questions 
will probably be, what kind of a boy was Daniel Drew, and 
how did he begin to make money? 

It goes without saying that Drew was the most unique 
figure that Wall Street has ever seen, and a characteristic 
specimen of one kind of American thrift, enterprise and 
speculation. Every side of his many-sided and peculiar 
character, therefore, is of interest as the representative of a 



148 INTERESTING EPISODES IN DREW'S UFE. 

class to the reader who sets his heart on making money, and 
the majority of readers have this weakness. He is of special 
interest to all speculators not only in this country, but 
throughout the civilized world. These facts constitute my 
apology for dwelling so long and minutely on his character- 
istics. I have an idea that his life and adventures will be 
read with deep interest many years hence, and help to pro- 
long the existence and reputation of this book. They will 
also assist to immortalize the man who was one of the most 
wonderful products of American civilization, and who could 
hardly have been evolved from any other soil or clime. Such 
prodigies of success cause the members of the older social 
fabrics to stare with astonishment at the stupendous capa- 
bilities of our great country. 

There is nothing interests people so much as the start in 
life, probably because there are so few who consider them- 
selves able to get a good start. So far as I can learn, in 
the case of Daniel Drew, the boy was father to the man. 
He worked on a farm, going to school at intervals, where 
he was unable to learn anything, except that he obtained a 
notion of the current theological ideas of that day, until he 
was fifteen years of age, when his father died, leaving him, 
a younger brother and their mother to shift for themselves 
on a poor, small farm. His father was of English and his 
mother of Scotch descent. 

In his seventeenth year young Drew enlisted as a substi- 
tute in the State Militia, which had then been called into 
service on account of the second war with England. 

The regiment was placed at Fort Gansevoort, on the 
Hudson, opposite New York. Hostilities ceased between 
this country and England a few months after his enlistment, 
and the regiment was mustered out. Daniel returned home. 
His mother had taken charge of his substitute money, which 
probably did not exceed a hundred dollars, the amount 
with which his great rival, Commodore Yanderbilt com- 
menced life, and which he earned from his mother by 
ploughing and planting a field. 



HE BORROWS MONEY TO BUY CATTLE. 149 

" I want my substitute money,'' said Drew to his mother, 
one day shortly after his return. " What are you going to 
do with it ?" queried the old woman, for being of Scotch 
descent, she was quite as thrifty in looking after the pennies 
as her American contemporary, old Mrs. Yanderbilt. They 
both had the gripping sense by nature, and to this trans- 
missible quality may probably be attributed, in a large 
degree, the financial success of both of their sons. 

"I am going to buy cattle, and sell them in New York," 
replied Daniel. 

" Are you sure you will not lose money by it ?" rejoined 
his mother. 

" I am sure I will make money," he said. 

He started to purchase cattle in the country and to sell 
them in New York. His profits were at first very small, 
especially as his capital was so limited. He soon discovered 
that if he could purchase his cattle in Ohio he would be 
able to increase his profits largely, and he applied to Henry 
Astor, a butcher in Fulton Market, and a brother of the 
great millionaire, John Jacob Astor, for a loan to speculate 
in Ohio cattle. Astor accommodated him, though he at 
first thought he was running a considerable risk. He was 
mistaken, for Drew made money and soon established his 
credit on a solid basis. He bought cattle throughout Ohio, 
and drove them over the Alleghany mountains. He is said 
to have been the first drover who attempted this daring ex- 
periment. It required sixty days then to make the journey* 
He suffered great hardship and privation, and would some- 
times lose a third part of a drove of 600 or 1,000 in crossing 
the mountains. Yet, as cattle were very cheap in Ohio, his 
profits were still very large. 

One terrible night, in a terrific thunderstorm, the tree 
under which he took shelter was shattered to splinters, his 
horse was killed under him, and he himself was struck sense- 
less for a time. But no hardship or privation could deter 
him in the pursuit of making money. He afterwards ex- 
tended his operations to Kentucky and Illinois. 



15© INTERESTING EPISODES IN DREW'S LIFE. 

In 1829 Drew opened a cattle yard at Twenty-fourth 
street and Third avenue and ran the Bull's Head Tavern. 
He went into the steamboat business in 1834. Vanderbilt 
had then been seventeen years in the business. Westchester 
and Emerald were the names of his first two boats, and they 
ran between New York and Albany, in opposition to the 
Vanderbilt Line. Drew reduced the fare from three dollars 
to one, and attempted to freeze out Vanderbilt. The war of 
rates became so fierce that people were carried 100 miles 
between these two cities for a shilling. Drew added the 
Knickerbocker, the Oregon, George Law, Isaac Newton and the 
New World to his river fleet, and became quite a formidable 
competitor of the Commodore. 

In 1840 Isaac Newton organized the People's Line on the 
Hudson, of which Drew became the largest stockholder. 
The boats St. John, Bean Richmond and Brew were built, 
The Isaac Newton was burned and the New World was sunk. 

When the Hudson River Kailroad was opened, in 1852, 
Drew refused to sell out his stock. " You can regulate your 
fares as you choose," he said to the President of the Kail- 
road Company, " but the only way you can regulate my 
steamboat fares is to buy the People's Line, and this I 
don't believe you have money enough to do." The railroad 
line merely stimulated traffic, as the elevated railroads have 
done in our day, and Drew was only a gainer instead of a 
loser by the apparent competition. He also controlled the 
Stonington Line for twenty years. 

Drew made his debut in Wall Street in 1844, just thirteen 
years prior to my first appearance on the boards of this 
financial theatre, and he was quite a war horse in specula- 
tion when I entered the arena. He formed a partnership 
with his son-in-law, a Mr. Kelly, and Nelson Taylor, as 
stock brokers and bankers. Their business was large and 
their credit good. The firm continued for ten years, until 
it was dissolved by the death of his partners. Drew then 
became one of the most daring and successful operators m 
Wall Street 



HIS DREAD OF DYING IN POVERTY. 151 

Drew was married at the age of 25 to Eoxana Mead, a 
farmer's daughter, by whom he was the father of three 
children, William H., Josephine, who died in infancy, and 
Catharine, who was married to the Eev. W. I. Clapp, a 
Baptist clergyman, who died and left his widow in good 
circumstances. So there were very little grounds for 
"Uncle Daniel's " dread that he should probably die in 
miserable destitution, as it seems that his two surviving 
children were very kind to him. His wife died in 1876. 

Drew was a member of St. Paul's Methodist Episcopal 
Church of New York for several years. He contributed 
large sums to various religious and educational institutions, 
but like Wilkins Micawber, he usually paid the money in 
notes, which appeared in the schedule of his liabilities when 
he had lost his large fortune, and had become bankrupt. 
He founded the Drew Seminary at Carmel, for young ladies, 
at a cost of $250,000. He built the Drew Theological 
Seminary, at Madison, New Jersey, also at a cost of $250,- 
000, and endowed it with a similar amount. He only paid 
the interest on the latter. He increased the endowment 
fund of the Wesleyan University, at Middletown, Conn., 
and the Concord Biblical Institute. He added $100,000 to 
the endowment fund of Wesley University, but only paid 
the interest on that also. These appear in the schedule, in 
the list of his unsecured claims. He owned several large 
grazing farms in Putnam county, but they were heavily 
mortgaged. 

Drew had some intention of returning to his old home 
after the bankruptcy proceedings in 1876, to spend the re- 
mainder of his days there among his grandchildren. This 
desire shows that there was something inherently soft and 
good, after all, in his avaricious nature, and reminds me of 
the touching lines of Cowper on the same subject : 

" Be it a weakness, it deserves some praise, 
We love the play place of our early days, 
The scene is touching, and the heart is stone, 
That feels not at the sight, and feels at none." 



152 INTERESTING EPISODES IN DREW'S UFE. 

He went out to Putnam county in 1876, when he was sick, 
but he was soon glad to get back to the city. He said : " 1 
was troubled with visitors, some of 'em well on to 100 years 
old. Some of them said I bought cattle from them when 
I was young, on credit, and they wanted their bills. 1 kept 
no books, and how was I to know I owed 'em for them crit- 
ters ? It was dull outen thar," he continued, " and yer never 
can tell till the next day how * sheers' is gone." 

So Uncle Daniel came back and stopped at the Hoffman 
House, where he could have ready access to the ticker, and 
kept constantly posted on the price of stocks. Eis principal 
broker was Mr. David Groesbeck. 

The city still seemed to have certain fascinations for him 
that the country was unable to afford. He often spoke re- 
gretfully, in his latter days, of being too old to retrieve his 
fortune. He said he longed for rest. Nothing seemed to 
weigh more heavily upon his mind than his inability to carry 
out the plans connected with his religious endowments, and 
he grieved deeply that he had not the means to return to Wall 
Street that he might have another lucky turn that would 
enable him to fulfil these religious obligations according to 
the original intention. 

In the bankruptcy schedule his personal property is item- 
ized as follows : watch and chain, $150 ; sealskin coat, $150 ; 
wearing apparel, $100 ; Bible, hymn books, &c, $130. 

Although he was economic in his domestic expenses, he 
entertained friends liberally, and his house at the southwest 
corner of Seventeenth street and Union Square was always 
open to Methodist ministers, free of charge, from all quarters 
of the world. 

Some years prior to his death Mr. Drew gave the follow- 
ing candid, succinct and pathetic account of his embarrass- 
ment to a journalist who interviewed him : 

" I had been wonderfully blest," said Uncle Daniel, "in 
money making. I got to be a millionaire before I knowed 
it hardly. I was always pretty lucky till lately. I didn't 



HE TRIES TO EMULATE VANDERBII/T. 15$ 

think I could ever lose money extensively. I was ambitious 
of making a great fortune, like Vanderbilt, and I tried every 
way I knew, but got caught at last. Besides that, I liked 
the excitement of making money, and giving it away, and 
am glad of it. So much has been saved anyhow. Wall 
Street was a great place for making money, and I could not 
give up the business when I ought to have done so. Now, 
I see very clearly what I ought to have done. I ought to 
have left the Street eight or ten years ago, and paid up what 
I owed. When I gave $100,000 to this institution and that, 
I ought' to have paid the money, and I ought to have pro- 
vided better for my children, by giving them enough to 
make them rich for life. Instead of that I gave my notes, 
and only paid the interest on 'em, thinking I could do better 
with the principal myself. One of the hardest things I have 
had to bear has been the fact that I could not continue to 
pay the interest on the notes I gave to the schools and 
churches." 

" I gave my son the old homestead," continued Mr. Drew, 
" and some other small property up in Putnam, where we 
came from, which I hope will make him independent at 
least. My daughter married a rich man, and when he died, 
leaving considerable property to five children, I was made 
executor of the will. For so great a trust as their property 
I was obliged to give security, which I did by making over 
to them this house where we are, and the North River 
steamboats, the Drew, Dean Eichmond, St. John and 
Chauncey Vibbard. This security makes them whole, and 
I thank God that breach of trust is not on my conscience. 
Their mother, my daughter, is, of course, well provided for, 
through her children and deceased husband. My son's 
principal business is now in connection with the manage- 
ment of the boats, by which he is getting on very well." 

After Drew's great disaster in the Erie u corner," he became 
a special partner in the firm of Kenyon, Cox & Co., and when 
this house failed, after the panic of 1873, Uncle Daniel was 



154 INTERESTING EPISODES IN DREW'S UFE. 

compelled to make an assignment. He had been for years 
on the losing side, having dropped between two and three 
millions in the Erie " corner " through the machinations of 
Gould and Fisk. Horace F. Clark and Gould had also 
cornered him in Northwestern to the tune of $750,000. 
After the panic he had made an assignment to Wm. L. 
Scott, of Erie, Pa., but was not legally declared a bankrupt 
until 1876. His liabilities were $1,074,131.83, and his 
assets were estimated at $746,499.46. 

Like Yanderbilt, Drew kept his accounts in his head, and 
considered the whole paraphernalia of book-keeping a con- 
founded fraud. 

His failure, which at one time would have induced a panic, 
did not cause a ripple on the surface of speculation. After 
his discharge in the bankruptcy proceedings, he appeared to 
pluck up fresh courage, and said, u The boys think I'm 
played out, but I'll give 'em many a turn and twist yet." He 
was interested in Toledo & Wabash, Canada Southern, 
Quicksilver Mining Company and Canton (Land) Company 
stock. 

Wm. H. Vanderbilt, who had received his early financial 
training as a clerk in Drew's office, still retained a kindly 
feeling for his old employer, and sometimes gave him 
" pints " as Drew called them, on which he made a little 
turn. It was said that Mr. Vanderbilt had intended to give 
him another start in life about the time Drew passed 
suddenly over to the majority. He died at 10.45 P. M., 
September 18, 1879, at the residence of his son, Wm. H. 
Drew, No. 3 East Forty-second street. 

His death came without any prior warning. He had been 
apparently in his usual health during the day, and had 
dined with Mr. Darius Lawrence, of Lawrence Brothers, 
brokers in Broad street, at the Grand Union Hotel, at six 
o'clock in the evening. After dinner he returned to the house 
of his son. About nine o'clock he complained of feeling ill, 
but refused to permit anybody to sit up with him, saying 



CALIFORNIA PARKER. 155 

he would call Mr. Lawrence, who slept in an adjacent room, 
if he should feel worse. About ten o'clock he went into 
Mr. Lawrence's apartments and said he felt much worse. 
Dr. Woodman, his family physician, was immediately sum- 
moned, but before his arrival Mr. Drew had expired. The 
cause of his death was apoplexy. 

Among the numerous stories related of Uncle Daniel's 
eccentricities, one is noteworthy in relation to his habit of 
getting in a mellow mood when prayer failed to soothe him, 
and covering himself up in bed after any speculative disap- 
pointment. He was found in this condition one day at the 
Sturtevant House, the year in which he died, by two Wall 
Street acquaintances who called upon him, and were conver- 
sant with his peculiar habits. He had all the windows closed, 
so that the atmosphere in the room was stifling, and was 
enveloped in several pairs of double blankets. His friends 
called for a bottle of champagne, of which he refused to 
partake. When this was drunk they called for another, and 
left it with him, believing that when he was left alone he 
might be inclined to imbibe without any feeling of embar- 
rassment. 

Another story is related characteristic of Uncle Daniel's 
methods of making the best use of a secret, and any confi- 
dence that a person might foolishly repose in him, in a 
speculative deal. During the war a young man known as 
California Parker, who had more money than brains, began 
to buy Erie in the vicinity of par, and put it up to 120. He 
went to Drew and told him that he would let him in at 
fifteen per cent, below the market, if he would only aid him 
with a little money to carry the price higher. Mr. Drew 
blandly appeared to entertain the young millionaire's propo- 
sition favorably and Parker, on the strength of that, con- 
tinued the struggle until he had almost reached the end of 
his California gold. The next morning when he met Drew 
the latter told him that he was unable to raise the money, 
and appeared to be grieved at his disappointment. In the 



156 INTERESTING EPISODES IN DREW'S UFE. 

meantime Drew had instructed his brokers to sell Erie 
"short," knowing that Parker was unable to absorb any 
more of that precious paper, Erie stock. The market went 
down, Drew made a " scoop," and Mr. Parker retired from 
Wall Street a ruined, but a wiser man. 

In personal appearance Drew was tall, strong and sinewy, 
and in his latter days his face was seamed with deep lines, 
indicating intense thought and worry. He had restless 
twinkling eyes, with a steady cat-like tread in his gait. His 
general demeanor was bland, good-natured and insinuating, 
with affected but well dissembled humility, which was 
highly calculated to disarm any resentment, and enable him 
to move smoothly in society among all shades and conditions 
of men. He has often been mistaken for a country deacon. 

So, now, having revived and collated the chief incidents 
in the chequered career of this great speculative celebrity, 
I close this sketch with the ardent hope that he may have 
found that peace beyond the tomb which the ordinary spec- 
ulator in Wall Street can seldom or never hope to achieve 
on this side of " that beautiful shore." 



CHAPTER XVIII. 

PANICS.— THEIR CAUSES— HOW FAR PREVENTABLE. 

Not Accidental Freaks of the Market. — We are still a 
Nation of Pioneers — The Question of Panics Pecu 
liarly American. - Violent Oscillations in Trade 
Owing to the Great Mass of New and Immature 
Undertakings. — Uncertainty About the Intrinsic 
Value of Properties.— Sudden Shrinkage of Rail- 
road Properties a Fruitful Cause of Panics. — 
Risks and Panics Inseparable from Pioneering Enter- 
prise. — We are Becoming Less Dependenf on the 
Money Markets of Europe. — In Panics Much Depends 
upon the Prudence and Self-control of the Money 
Lenders. — The Law which Compels a Reserve Fund in 
the National Banks is at Certain Crises a Provoca- 
tive of Panics. — George I. Seney. - John C. Eno.— 
Ferdinand Ward.— The Clearing House as a Preven- 
tive of Panics. 

THERE are few subjects on which there is more loose theo- 
rizing than that of the origin and remedy of panics. 
These crises are commonly spoken of as accidental freaks 
of the markets, due to antecedent reckless speculations, 
controlled in their progress by the acts of men and banks 
who have lost their senses, but quite easily prevented, and as 
easily cured when they happen. 

These are the notions of mere surface observers. They 
may be in a measure true, when applied to the markets of 
some of the older countries, whose business moves in long- 
established grooves and embraces but little of the risk 
attendant on new enterprises. In France and Germany, 
for instance, the hazards of business are almost entirely 
confined to the accidents of political events ; and such na- 
tions are comparatively exempt from panics due to purely 
commercial causes. In the United States, panics arise, 
principally, from causes from which European countries are 
exempt. 



158 PANICS. 

Notwithstanding our immense population and the large 
measure of well-ordered consolidation that has been effected 
in our various interests, we are still a nation of pioneers. In 
every ten years, we now add nearly fifteen millions to our 
population, which means that each successive decade we are 
piling up the equivalent of a first-class European state upon 
our past marvellous accumulation of empire. Inseparable 
from this unparalleled national growth are great ventures 
and great commercial and financial risks. Our new popula- 
tion has to subdue new territory. New lands have to be 
cleared ; new mines have to be opened ; new industries have 
to be established ; new railroads have to be built ; new 
banks created and new corporations founded. These new 
ventures are necessarily in a measure experimental. Some 
of them fail utterly ; others succeed magnificently. They 
require large outlays of capital in advance of obtainable re- 
sults. These outlays are, in many cases, met by borrowing ; 
the loans being secured by liens upon the uncertain under- 
takings, and therefore lacking the stability of value that 
attaches to well developed investments. 

We have thus a ceaseless stream of new issues of stocks, 
mortgages and commercial paper, and have, therefore, at all 
times outstanding a large amount of obligations which, from 
the uncertainty of their basis, are liable to wide fluctuations 
in value. Besides these absolutely new investments, we have 
also at all times an equal or larger amount of obligations 
issued against enterprises which, although not properly 
new, are still in an unconsolidated and experimental stage, 
and the value of which is, therefore, subject to wide fluctua- 
tions. Issues of this character naturally appeal to the 
adventurous instincts of our people and elicit a vast extent 
of speculative activity. 

It is this peculiarity in the development and trade of the 
United States that renders our markets more exposed to 
panic than those of any other nation, and which makes the 
question of panics a peculiarly American one. In any and 



INTESNAI, NATURE OF PANICS. 159 

every commercial nation, trade is subject to regular succes- 
sions of prosperity and depression. This oscillation results 
from, or constitutes a natural law. 

The action of commerce, like the motion of the sea or 
the atmosphere, follows an undulatory line. First comes 
an ascending wave of activity and rising prices ; next, 
when prices have risen to a point that checks demand, 
comes a period of hesitation and caution ; then, care 
among lenders and discounters ; then comes the descend- 
ing movement, in which holders simultaneously endeavor to 
realize, thereby accelerating a general fall in prices. Credit 
then becomes more sensitive and is contracted ; transactions 
are diminished ; losses are incurred through the depreciation 
of property, and finally the ordeal becomes so severe to the 
debtor class that forcible liquidation has to be adopted, and 
insolvent firms and institutions must be wound up. This 
process is a periodical experience in every country ; and 
the extent of the destructiveness of the crisis that attends it 
depends chiefly on the steadiness and conservatism of the 
business methods in each particular community affected. In 
addition to this ordinary and, I would even say, natural 
liability to commercial crises with a greater or lesser de- 
gree of panic, we, in the United States, have to stand the 
far more violent oscillations so inseparable from our great 
mass of new and immature undertakings. 

In times of crisis, the obligations issued against such en- 
terprises suffer instantly from the uncertainty about their 
intrinsic value. Holders are anxious to get rid of them ; 
banks which have advanced money on them, call in their 
advances ; and they become virtually unavailable as- 
sets. Every panic that has happened since the beginning 
of the era of railroads in this country, has been intensified 
many-fold by the sudden shrinkage in the value of this class 
of assets ; and it is precisely here that the aggravation and 
the chief danger of an American panic centres. 

In view of these facts, what is the use of discussing the 



160 PANICS. 

possibility of averting our periodic panics ? Risks and pan- 
ics are inseparable from our vast pioneering enterprise ; and 
all we can hope is, that they may diminish in severity in 
proportion as our older and more consolidated interests 
afford an increasing power of resistance to their operation. 
I am disposed to think that, in the future, the counter- 
action from this source will be much more effective than it 
has been in the past. The accumulations of financial re- 
source available for market purposes at our monetary cen- 
tres are increasing at a very rapid rate. Evidence of this 
is seen in the fact that, while the magnitude of our corporate 
undertakings is augmenting every year, we are also every 
year becoming less dependent on the money markets of 
Europe, and our large corporate loans are now made princi- 
pally at home. These accumulations afford elasticity to 
our financial system and serve as a buffer against the vio- 
lence of great financial disturbances. 

I do not see how we can in any other way satisfactorily 
explain how it is that, while we have had two distinct waves 
of commercial depression since the great crisis of 1873, such 
as have ordinarily been attended with more or less panic, 
we have had no disturbance that can be regarded as a fully 
developed panic. The only approach to it was the disturb- 
ance brought about by the Grant & Ward failure in May, 
1884, which was merely a restricted and comparatively 
temporary affair. 

But, whilst maintaining that panics cannot be avoided in a 
country situated as ours is in its present incomplete develop- 
ment, I cannot avoid expressing the opinion that conditions 
are permitted to exist which needlessly aggravate the perils 
of these upheavals when they do occur. In every panic very 
much depends upon the prudence and self-control of the 
money lenders. If they lose their heads and indiscriminately 
refuse to lend, or lend only to the few unquestionably strong 
borrowers, the worst forms of panic ensue ; if they accom- 
modate to their fullest ability the larger and reasonably safe 



UNFAIR RESTRAINTS ON NATIONAL BANKS, 161 

class of borrowers, then the latter may be relied upon to 
protect those whom the banks reject, and thus the mischief 
may be kept within legitimate bounds. Everything depends 
upon rashness being held in check by an assurance that 
deserving debtors will be protected. This is tantamount to 
saying that all depends on the calmness and wisdom of the 
banks. They may easily mitigate or aggravate the severity 
of the crisis, according as they are prudently liberal or 
blindly selfish. It is, perhaps, safe to say, that the banks 
never do all they may ; but the banks of this city must be 
credited with having shown great sagacity under repeated 
derangements of this kind within the last twenty-five years. 
They have largely succeeded in combining self-protec- 
tion with the protection of their customers ; and the ante- 
cedents they have established will go far toward breaking 
the force of any future panic. 

But, unfortunately, the law imposes restraints upon the 
national banks which seriously interfere with the wise dis- 
cretion of those institution. As the law now stands, the 
banks are liable to be wound up at the order of the Govern- 
ment if they permit their lawful money reserves to fall below 
25 per cent, of their legal deposits. This establishes a 
44 dead line " which is so dreaded when approached that it 
becomes almost a panic line. When that limit is reached, 
the banks are compelled to contract their loans ; and, 
in certain conditions, the contraction of loans means forci- 
ble liquidation, without regard to consequences. Thus 
the very contrivance designed to protect the banks be- 
comes a source of most serious danger to their customers 
and therefore to the banks themselves ; and, in times of 
monetary pressure, it is the most direct provocative of panic. 
Were the banks allowed to use their reserves under such 
circumstances, a fund would be provided for mitigating the 
force of the crisis, and the danger might be gradually tided 
over ; but, as it is, the banks can legally do little or nothing 
to avert panic ; on the contrary, the law compels them to 



162 PANICS. 

take a course which precipitates it ; and when the crash Vis 
come, they have to unite in common cause to disregard the 
law &nd do what they can to repair the catastrophe that a 
preposterous enactment has helped to bring about. This is 
one of not a few unwise restrictions upon our national banks 
which needs to be stricken from the statute book. These 
periods of the breaking- down of unsound enterprises and of 
the weeding out of insolvent debtors and of liquidation of 
bad debts can never be wholly averted ; nor is it desirable 
that they should, for they are essential to the maintenance 
of a sound and wholesome condition of business ; but it is a 
grave reproach to our legislators if, when the day of purga- 
tion comes, the law treats the deserving and the undeserving 
with equal severity. 



George I. Senet. 

The most prominent characters in the short lived panic 
of 1884, as every observing person knows, were Ferdinand 
Ward, James D. Fish and a few others who acted minor 
parts in connection with the methods of financiering which 
precipitated the crisis in Wall Street. 

There are many people who think that Ward — the Young 
Napoleon of finance, as he was popularly called — was able to 
dupe everybody, his accomplices included, and that he was 
chiefly responsible for all the trouble. But this is an ex- 
aggerated and unscientific view of the case. 

Among the financiers who came to grief in the general 
embarrassment caused by the peculiar methods of the two 
financiers referred to, was George I. Seney. Seney gave his 
money away, and it was placed in the wrong quarters 
for any tangible return. He was a great patron of the 
churches and religious institutions. If he had studied 
the life of Daniel Drew, he might have discovered that 
investments in such enterprises as these were not particu- 
larly profitable. In his financial difficulties, Seney was 



seney' s wonderful financial abilities. 163 

left high and dry without friends who would come to his 
rescue. The result was, that the two financial institutions. 
the Metropolitan Bank and the Brooklyn bank with which he 
was thoroughly identified, had to go under as the result of 
Mr. Seney's misfortunes. And an insurance company in 
Brooklyn, which had loaned about all of its surplus to Mr- 
Seney, taking Metropolitan Bank stock as collateral, was 
swamped as well. 

There are few of the speculative magnates who succumbed 
to the crash of 1884, whose financial histories are more in- 
teresting than that of Mr. Seney. He is the son of a 
Methodist minister, and was born at Astoria, Long Island, 
about sixty years ago. He has always manifested the 
deepest devotion to his paternal church, and in the very 
height of his prosperity the church was the first object of 
his financial care. He was educated at the University of 
the City of New York, and shortly after he graduated, 
and when about 22 years of age, entered the Metropolitan 
Bank as a clerk. He was afterwards teller and then cashier. 
This was when Mr. Williams was President and when Mr. 
Jacques was Vice-President. Mr. Jacques resigned that 
position several years ago and made a prolonged journey to 
Europe. Mr. Williams died a few years ago, and Mr. Seney 
became his successor as President of the bank. 

Mr. Seney's wonderful financial abilities were a compara- 
tively recent outgrowth of his mental evolution, at an age 
when very few men exhibit signs of new developments. 

Up to a date shortly prior to the panic, he was generally 
regarded as slow and phlegmatic, without manifesting any 
special parts that indicated superior brilliancy as a financier 
He first distinguished himself in Wall Street during the 
speculative furore of 1879, and came to the front then with 
sudden and surprising activity. He carved out an original 
course for himself in speculation — so original, in fact, as to 
stamp the enterprises with which he became identified with 
his name. The Seney properties became almost as familiar 



164 PANICS. 

to the financial world as the Goulds, the Vanderbilts and the 
Yillards. 

Mr. Seney's chief securities (so-called through the courtesy 
of speculative parlance) were Ohio Central, Rochester and 
Pittsburgh, East Tennessee, Yirginia & Georgia, and the 
celebrated " Nickel Plate " Road. These were known as the 
Seney Syndicate properties, and the system of handling 
them was entirely novel in the history of Wall Street, 
causing the financial veterans of Wall Street to stand and 
stare at the boldness and rapidity of the Seney move- 
ments. 

Instead of starting with moderate issues in amount, as has 
usually been the custom of most men handling railroad 
and telegraph properties, and doing the watering process 
by degrees, Mr. Seney boldly began the watering at the very 
inception of the enterprise, pouring it in lavishly and with- 
out stint. There was nothing mean or niggardly about his 
method of free dilution, the sight of which threw some of 
the old operators into a fit of consternation. The stocks 
were strongly puffed, and as they were so thoroughly diluted 
their owners could afford to let them get a start at a very 
low figure. The future prospects of the properties were set 
forth in the most glowing colors, the public took the bait, 
and the stocks became at once conspicuous among the 
leading active fancies of the market. 

The cause of the vigorous life and amazing activity so 
suddenly imparted to the stocks of the Seney Syndicate can 
only be revealed by a careful perusal of Mr. Seney's check- 
book, which, if still in existence, will show commissions paid 
for the execution of the orders to buy and the orders exe- 
cuted to sell, both by the same pen and in the same hand- 
writing. 

These transactions, in the language of the " Street," are 
called washed sales. In this way Mr. Seney was understood 
to have made a very large amount of money, and from being 
almost one of the poorest men in Brooklyn, he soon became 



SENEY AS A PHILANTHROPIST. 165 

marked as the richest. While he continued to thrive it 
was a singular fact that the majority of his financial friends 
seemed to fall into a decline. 

When the affairs of the Seney enterprise were wound 
up, it was discovered that these people had little left ex- 
cept the certificates which bore the high-sounding term of 
the Seney Syndicate Property. 

One peculiarity about Mr. Seney in his social relations 
was, that while he appeared almost bereft of sympathy for 
used-up friends whom his schemes had ruined, he drew 
largely on his immense gains for philanthropic purposes, 
and in the aggregate must have distributed over $2,000,- 
000 in a very magnanimous manner. 

It would seem that Mr. Seney at one time aspired to 
be a great philanthropist, and had it not been for the 
unfortunate expose which was the result of the panic, he 
might one day have stood in as high and lordly a posi* 
tion as the renowned Peabody, with even a greater repu- 
tation as a financier. It is sad to picture the contrast 
presented by the denouement with what might have been, 
in a career which began with so much promise, dating 
from the time that Mr. Seney was installed as President 
of the Metropolitan Bank, whose standing and credit were 
the highest in the State. 

Mr. Seney's speculative career affords an example of the 
way in which this kind of speculation reflects on the 
stability of our best banking institutions. The lesson is 
one that should be carefully taken to heart by the finan. 
ciers of this country. 

It is due, however, to Mr. Seney to state that he alone 
was not responsible for the misfortunes of the Metropolitan 
Bank, although he was the ruling spirit ; for it could hardly 
be possible that the directors of that institution could have 
been ignorant of its affairs in connection with the Seney 
speculations. The Metropolitan Bank cannot be compared 
with the Marine Bank, which met a similar misfortune, for 



168 PANICS. 

it was no family affair, and Mr. Seney had none of his 
relatives connected with it, as Mr. Fish had with the Marine 
Bank. 

It appears that it was chiefly owing to the fact that Mr. 
Seney had so little personal interest in the Metropolitan 
Bank that he was so anxious to gut the concern, knowing 
that the loss would fall upon others. 

The most important point for speculators and investors, 
however, connected with the enterprises of these men is, 
that the terrible shrinkage of Stock Exchange values at 
the time, amounting to over $1,000,000,000, was in a large 
measure brought about by a foregone conclusion on the 
part of the sagacious bear cliques that disaster would sooner 
or later overtake the institutions over which Mr. Seney and 
Mr. Fish presided. 

This should afford a wholesome lesson, through the medium 
of practical experience, to speculators and investors for all 
future time. For this very reason the facts are worthy of 
oeing put on permanent record as a reminder and a guide, 
particularly to Wall Street men, who are too often prone to 
forget the past and thus leave themselves liable to be caught 
in a similar net again. 

The transactions of the four prominent speculators 
who played the most conspicuous part in the events which 
resulted in the panic of May, 1884, should be preserved for 
reference, as a guide when similar cases arise, for in 
spite of the deep disgrace, shame and misery that have 
followed in the wake of their enterprises, these men will 
have hosts of imitators for many years to come. Ward, 
Fish, Seney and Eno, with probably the one exception, Fish, 
are, by many, considered smart men, who simply had the mis- 
fortune to become involved, but who had a fair chance of 
coming out of all their troubles, great millionaires and pub- 
licly honored for their ability and success. 

It must be admitted that there are some examples in the 
financial world whose careers will fully support this theory 



and belief bet they are the exceptions which only pro?e the 
rale in speculation, as in otner lines of business, that "honesty 
is the best policy." These men, who have been apparently 
so successful through dishonest methods, are never free from 
dread of being tripped up at any period of their inflated 
prosperity. They are always subject to be called upon by the 
application of the stern methods of honest financiering to 
give an account of their stewardship, and to have the trans- 
actions of a lifetime eventually gauged by the standard of 
public honesty. It is the winding up that tells the tale, 
and exposes the duplicity of the ablest financiers, who vainly 
imagine that dishonest methods will always prevail. 



John C. Eno. 

Of the four famous " financiers " mentioned who were most 
prominent in the Summer panic of 1884, the speculative 
history of John C. Eno was in some respects the most re- 
markable and most interesting. 

Eno was a young man, not more than twenty-six years of 
age, and a representative of that class of ardent and youth- 
ful speculators who plunge into the market with all the 
recklessness incident to young and sanguine imaginations, 
with many roseate schemes of wealth and greatness, for 
which inexperienced youth is proverbial. Eno was a vic- 
tim of that rashness, impulsiveness and desire for extrava- 
gance, by which the possessors of these attributes frequent- 
ly get themselves and many of their associates embroiled in 
numerous difficulties and embarrassments. 

Another point of interest in the curious career of Eno was 
his position as President of the Second National Bank of 
New York, up to the time of the panic. Seldom does it fall 
to the lot of a youth of his tender years to have conferred 
upon him a position of such responsibility and dignity. The 
manner in which he made use of this position of trust, for 
aopropriating money which did not belong to him, was not- 
able for its peculiar ingenuity. 



168 PANICS. 

Most of the money lent by the bank was upon collateral 
securities, which, for convenience, as well as for safety, were 
kept, not at the bank, which was situated under the Fifth 
Avenue Hotel, but in a vault down town. 

The capital stock of the bank was $100,000, and it had 
$4,000,000 of deposits, all of which was appropriated to 
speculative use by this smart young man, who decamped to 
Canada in company with a Eoman Catholic priest. 

Eno happened to have a rich father, who had made his 
money by thrift and economy during a long and prosperous 
life. To his credit, it must be said, that he came promptly 
to the rescue of this wayward and erring son, and paid the 
bank, of which he was director, three and one-half millions 
of dollars, on condition that the other half million should be 
contributed by the other directors, all of whom were very 
rich men. The directors willingly accepted the proposition, 
and thus the entire deficiency was made good by this gen- 
erous arrangement, so that none of the depositors suffered 
the loss of a dollar. 

The methods which Mr. John C. Eno, the President, re- 
sorted to for the purpose of capturing the institution root 
and branch, were ingenious and unique in their character, 
inasmuch as they had a tendency to inspire the fullest confi- 
dence in his vigilance and honesty regarding the affairs of 
the bank, instead of exciting any suspicion. 

He discouraged the custom of keeping the securities of the 
bank in its own vaults, on the pretense that they were not 
sufficiently secure, and suggested that a safe should be 
rented in one of the down town safe deposit companies. 
This was done at his request. He argued, further, that the 
funds on hand being mostly family deposits, the depositors 
were not of a class that often required to be accommodated 
with discounts, and that the money was not taken by the 
bank to be locked up and kept on hand so as to have the 
name of having it, but to be used to the best possible ad- 
vantage consistent with safety, to make profitable returns 



ENO'S DOWN-TOWN GAME. 169 

through interest. Consequently, he was allowed to use the 
money of the bank freely to make loans to Wall Street 
brokers on interest, with approved collaterals, and he repre- 
sented to the directors that he was carrying out this course. 

As the bank was located so far up town, (at Twenty- third 
street,) the distance from "Wall Street made it extra hazard- 
ous to send securities back and forth, as adventurous thieves 
might seize the messenger on the way. This has frequently 
happened in this city. It was, therefore, desirable to have 
the safe deposit vault in close proximity to Wall Street. Of 
the combination to the safe in this vault Mr. John C. Eno 
was the sole possessor. Having things fixed in this manner 
it was indispensable that the President himself should go 
down town every day, so as to accommodate the brokers in 
the loaning of money. The directors were by this plan 
convinced that the risks, through the careful methods adopted 
by the President, were no greater than if the bank was located 
in Wall Street. These conservative methods, so skilfully 
planned and plausibly explained, increased the confidence of 
the directors in the able and careful management of Mr. Eno, 
and nobody was so much surprised as they, when the wool 
was raised from their eyes and they discovered that these 
various and ostensible "safeguards" were ingeniously de- 
vised for the sole purpose of screening their skilful 
inventor in the accomplishment of his huge defalcations 

Instead of loaning the money to Wall Street brokers, as 
he represented to the directors, he placed it as margin 
with his own brokers in various speculative ventures, 
and in that manner he made away with the entire $4,000,000 
of the bank's deposits without exciting the least suspicion 
in the confiding breasts of the directors. 

Such another instance of a clean sweep of the deposits of 
a bank by any of its officials, is probably not on record in 
the whole history of this kind of manipulation. 

When the President represented to the Cashier, every 
evening, that he had lent specified sums on certain secur- 



170 PANICS. 

ities, his word was taken, and his checks for the amounts 
duly honored, without exciting a feeling of suspicion. Thus, 
by degrees the books of the bank showed $4,000,000 of 
call loans upon unexceptionable collaterals, when in fact the 
money had all gone to the President's private account. 

Eno speculated with the greater portion of the money 
in stocks that were continually declining in price, and at 
length the time arrived when he was obliged to make a clean 
breast of the terrible condition of his affairs to his father. 
As I have stated, the old gentleman, Mr. Amos B. Eno, 
nobly came to the relief of his prodigal son, and saved the 
bsjak from suspension. 

As Eno senior is still worth about $25,000,000, he 
will never suffer the pangs of poverty through this great 
loss ; but it will take a long time to enable him to survive 
the disgrace which the flagrant acts of his son have brought 
upon an honest and highly respected name. 



THE CLEARING-HOUSE AS A PREVENTER OF PANICS. 

In this panic the boldest and most remarkable instance of 
self-sacrifice on record was manifested by the Clearing-House 
banks. The panic of 1884, in its incipient stage, was differ- 
ent to any that had preceded it — at least any of the finan- 
cial convulsions within my recollection — owing to the influ- 
ence exercised upon it by the prompt and liberal policy of 
the banks. In every respect their action was notable, 
showing that those at the head of their management had 
largely profited by the lessons of former panics. 

It was chiefly due to the masterly management of the 
banks, together with the magnanimous conduct of Mr. Amos 
B. Eno and his associate directors of the Second National 
Bank, that the panic was short-lived and so narrowly cir- 
cumscribed. Had it not been for the determinate and in- 
stantaneous joint action of these parties there would have 
been a very serious crash, which would have been far- 
reaching in its results. 



seney's pictures as cou,aterai,. 171 

The results of the timely action taken on the part of the 
managers of these institutions in this crisis, proves that 
panics can be arrested by proper methods, and that quick and 
'determined action is indispensable in the incipient stage of 
the emergency. If bank presidents could only be relied upon 
by the business community to act promptly and in unison 
with the business men, as they did in this instance, threatened 
panics need have but little terror for the people, who now 
live constantly in dread that these outbursts of business 
disaster may be "sprung upon them at any time in any 
decade. 

In the past history of panics bank managers, as a 
rule, have acted without system, without judgment and 
almost entirely without any well defined plan of action. 
There has been an astonishing lack of vigor in their meth- 
ods and purposes, which were weak and vacillating in their 
character — frequently more like the acts of children than 
those of business men. 

If the panic of 1873 had received the same vigorous 
treatment in its origin as that of 1884, it could just as easi- 
ly have been checked as the latter, and the entire country 
would have been saved a large portion of the depressing 
effects of that serious collapse and its attendant disasters, 
which caused a state of general prostration for five or six 
years succeeding the event. These years, from a business 
standpoint, appear as a blank in the history of the country's 
progress. Indeed, they constitute a black mark. 

In 1884 the bears indulged in much adverse criticism in 
regard to the action of the Clearing- House in taking Mr. 
Seney's pictures as collateral. At the time, this method of 
financiering was without precedent ; but the result has 
fully justified the policy of the Clearing-House Association 
and its management. Such an exceptionally fine collection 
of paintings in a country like this, now filled with connois- 
seurs who have sufficient wealth to gratify their tastes, 
stimulates the demand for these luxurious articles of value 



172 PANICS. 

and transforms them into the best collateral to be found in 
the market. When the Seney pictures were offered for sale 
at auction they attracted greater competition in the purchase, 
at good prices, than could have been obtained for almost any 
class of railroad securities connected with Wall Street for 
months afterwards. While Mr. Seney seems to have been 
as much of a virtuoso as the late Mrs. Morgan, he did not 
permit his love of the beautiful to rise to such a pitch of 
exaltation as would cause him to pay the extravagant prices 
which almost ruined that eccentric woman. He never forgot 
that the picture had a " market" value, and never permitted his 
enthusiasm for the fine arts to make him a victim of sharp 
and unconscionable dealers. In fact he appeared to have 
been more wide-awake in picture buying than banking, and 
demonstrated that the former, rather than the latter, was his 
forte. If the bank presidents had not acted in the praise- 
worthy manner referred to, the financial revulsion of that 
panic would have been very serious. Several millions of 
deposits in the Metropolitan and Second National were 
promptly drawn out, and forthwith entered into circulation. 
This saved the community from the evil influence of a large 
number of panic makers in the persons of the depositors of 
these banks. Instead, therefore, of helping to stir up the 
excitement — as they would have done by pursuing the selfish 
policy formerly resorted to in similar circumstances — every 
person with funds in these two institutions, assisted very 
effectively to allay suspicion and create confidence, instead 
of distrust. 

It was the disturbing element of panic makers, who gen- 
erally constitute one of the most potent factors of disruption 
to be dealt with in seasons of business trouble, that caused 
the greater part of the trouble at the time of Jay Cooke's 
failure. The holders of the Northern Pacific bonds then, 
finding that the security was no longer equal to that of 
Government bonds (as they had been taught to believe), but 
was apparently worthless, became panic-stricken at their 



HOW PANIC MAKERS ARE MADE. 173 

losses, and were all transformed into panic-makers, infusing 
the spirit of distrust into every person with whom they came 
into contact, until, like a fatal virus, it inoculated the whols 
XHsntry, spreading business disaster far and wide. 



CHAPTER XIX. 

OLD TIME PANICS. 

The Panic of 1837.— How it was Bbought About.— The 
State Banks. — How they Expanded their Loans 
under Government Patronage. — Speculation was 
Stimulated and Values Became Inflated. — Presi- 
dent Jackson's " Specie Circular " Precipitates the 
Panic. — Bank Contractions and Consequent Fail- 
ures. -Mixing up Business and Politics. — A General 
Collapse, with Intense Suffering. 

THE first panic of any great importance was that of 1837. 
This panic had its origin in a misunderstanding between 
the United States Bank, with headquarters located at Phila- 
delphia, and President Jackson, whose election the officials 
of the bank had opposed. 

The bank had been chartered in 1816, and went into opera- 
tion in 1817. Its charter had twenty years to run. The 
bank had been kept in operation with varying success until 
1830, when it was considered to be on a very stable footing, 
so that the Finance Committee of the United States Senate 
were enabled to testify to its efficiency as follows : u We are 
satisfied that the country is in the enjoyment of a uniform 
national currency, not only sound and uniform in itself, but 
perfectly adapted to the purposes of the Government and 
the community, and more sound and uniform than that 
possessed by any other nation." 

This was the second United States Bank ; the first had 
been chartered in 1791. 

The bank applied to Congress, in 1832, for a renewal of 
its charter, which would expire in 1836. A bill was passed 
by Congress to re charter the bank. The bill was vetoed 
by the President for the reason above stated. In the fol- 
lowing year the Treasurer announced, by order of the Presi- 



176 OI.D TIME PANICS. 

dent, that the public funds, amounting to $10,000,000, would 
be drawn from the custody of the bank because it was an 
unsafe depository. 

The transfer of the Government funds to the State banks 
created great agitation in political and financial circles. 
The State banks, under this favorable turn of Government 
patronage, quickly assumed a thriving condition and began 
to expand their loans and circulation. This stimulated 
speculation in all parts of the country, but especially land 
speculation. Large purchases of land were made from the 
Government, and payment was made in notes of State banks. 

With the rapid sales of its lands the Government was soon 
able to pay off the public debt, and had still a surplus of 
$50,000,000 in the Treasury. This apparent prosperity 
continued for the next year or two, money was plenty and 
speculation was greatly stimulated and values became in- 
flated. 

The crisis came in 1837, and was hastened by the " Specie 
Circular," which was the last official act of President Jack- 
son, and which pricked the bubble of inflation. Thia 
circular, which was issued from the Treasury in July, 18^6* 
required all collectors of the public revenue to receive 
nothing but gold and silver in payment. The purpose 
of the circular was to check the speculation in public lands, 
but it caused too sudden a contraction in values, and created 
widespread disturbance in business circles generally. 

The public protest against the " Specie Circular " was so 
strong and universal, that a bill went through both houses 
of Congress partially repealing it. " Old Hickory " did not 
yield to Congress, however, and though he did not veto the 
bill, he delayed signing it until after Congress adjourned, 
thus preventing it from becoming a law. 

The State banks sought to tide over the troubles arising 
from the Jacksonian method of financiering by loans of 
public money to certain financial concerns and individuals, 
but this plan only made matters worse. There was a sud- 



EFFECT OF THE JACKSONIAN POLICY. ITT 

den expansion of paper money, which encouraged a wild 
spirit of speculation and excessive importations, and im- 
parted an unnatural stimulus to business and commercial 
affairs. This state of overtrading and reckless speculation 
was suddenly checked by bank contractions, and in the 
spring of 1837 there were failures amounting to $100,000,000 
in New York city alone. 

The shock was communicated to the entire country, and 
a state of general paralysis in business circles ensued. 

In the meantime the Bank of the United States continued 
in operation, and did not even suspend in 1836, when its 
charter expired, but obtained another charter from the 
State of Pennsylvania, which was entitled 4 An Act to 
repeal the State taxes on real and personal property, and to 
continue and extend the improvement of the State by rail- 
roads and canals, and to charter a State bank to be called 
a United States bank." 

This United States bank did not expire until 1839, though 
it suspended specie payment with the State banks in 1837, 
when by this method they escaped a general collapse, and 
dragged through an agonizing existence for two years 
longer. The circulating notes and deposits of the Bank of 
the United States were paid in full, but the $28,000,000 of 
capital were a total loss to the stockholders, who never ob- 
tained a dividend. Such were the good old times of finan- 
ciering when GeneralJackson and his successor, Martin Van 
Buren, sat in the Executive chair. 

The entire capital stock of the bank was $35,000,000, of 
which $7,000,000 were to be subscribed by the Government. 

The real cause at the bottom of the failure of this bank 
was its error of mixing up its legitimate business of banking 
with politics and speculation, showing that keeping those 
matters as distinct as possible is one of the great secrets of 
success in each of them. 

The panic of 1837 was further aggravated hj the action 
of the Bank of England which, in one day, threw out all the 



178 OI,D TIME PANICS. 

paper connected with the United States. The banks on this 
side refused to discount paper, and as a retaliatory measure 
in self-defense the business men and speculators withdrew 
their deposits from the banks. This had a tendency to 
cripple business still more, and cause utter prostration. In 
their selfish frenzy bankers and merchants completed the 
ruin of each other, hastening the catastrophe from their 
inability to take a broad, cool and generous view of the 
situation. 

There was a general suspension of the New York banks 
on May 10, 1837, and the banks throughout the country 
followed in their wake within a week afterwards, producing 
a financial convulsion unparalleled in the history of the 
Eepublic. The country was brought to the verge of bank- 
ruptcy from the effects of which a long time was required 
for recovery. 

After two years' struggle to regain the credit and stability 
lost through false methods of financiering, the banks suffered 
a relapse, and underwent a severe process of weeding out 
the weakest, nearly one-third of which happened to be of 
this description. Out of 850 banks, 343 closed their doors 
permanently. 

The Sub-Treasury at New York was established the fol- 
lowing year, 1840, by an act of Congress which provided 
that the officers of the Government should keep the public 
funds in their own custody, that coin alone should be re- 
ceived in payment to the United States, and bank notes were 
to be no longer received and paid out at the Treasury. 

While this short chapter deals with matters which go 
back beyond my personal recollections of twenty eight 
years in Wall Street, still as the panic of 1837 was the first 
of the great upheavals of its kind, that had a marked effect 
on Wall Street affairs, it properly falls within the scope of 
this book to chronicle the chief incidents of that great busi- 
ness convulsion. 

Tor this reason, therefore, I find room for it, in some 



A LITTXE HISTORY. 179 

measure commensurate with its importance, and the space 
which can be afforded to it, as a matter of financial history, 
the facts of which were still fresh in the recollection of sev- 
eral speculators, bankers and business men, with whom I 
had the honor of being acquainted shortly after my advent 
in Wall Street immediately succeeding the panic of 1857. 

Of those who gave me lively descriptions of their vivid 
recollections of that panic, but few now survive. 

I think, therefore, it is well for me to do my part in help- 
ing to preserve the leading features of this important episode 
In the early history of Wall Street, as there will soon be 
none of those, who took an active part in the exciting events 
of that period, left to tell the tale. 



CHAPTER XX. 

THE TRUE STORY OF BLACK FRIDAY TOLD FOR THE 

FIRST TIME. 

The Great Black Friday Scheme originates in patriotic 
motives. — Advising Boutwell and Grant to sell 
Gold — The part Jim Fisk played in the Speculative 
Drama. — " Gone where the Woodbine Twineth." — A 
general state of chaos in wall street. — how the 
Israelite Fainted. — "What ish the prishnow?" — 
Gould the Head Centre of the Plot to " Corner" 
Gold. — How he Managed to Draw Ample Means 
from Erie. — Gould and Fisk Attempt to Manipulate 
President Grant and Compromise him and his Family 
in the Plot. — Scenes and Incidents of the Great 
Speculative Drama. 

IN the year 1869 this country was blessed with abundant 
crops, far in excess of our needs, and it was apparent that 
great good would result from any method that could be de- 
vised to stimulate exports of a part, at least, of the surplus. 

Letters poured into Washington by the thousand from 
leading bankers, merchants and business men, urging that the 
Treasury Department abstain from selling gold, as had been 
the practice for some time, so that the premium might, as it 
otherwise would not, advance to a figure that would send 
our products out of the country, as the cheapest exportable 
material in place of coin, which, at its then artificially de- 
pressed price, was the cheapest of our products, and at the 
same time the only one undesirable to part with. So the 
Government decided to suspend gold sales indefinitely. 

Jay Gould and others, being satisfied that this was to be 
the policy of the Administration, commenced at once buying 
large amounts of gold, actuated, doubtless, by the purest of 
patriotic motives, namely, to stimulate cotton and cereal 
exports. They succeeded in accumulating a considerable 



182 THE TRUE STORY OF BI<ACK FRIDAY. 

amount of gold at prices ranging from 135 to 140, covering 
a period of three months' steady buying. 

This was the honest foundation on which the great Black 
Friday speculative deal was erected. 

The eruption on Black Friday was really caused by the 
erratic conduct of James Fisk, Jr., who actively joined the 
movement on Thursday, the day before, and became wild 
with enthusiasm on the subject of high gold. He began on 
Friday, early in the morning, to buy large blocks through 
his own brokers, William Belden and Albert Speyer, run- 
ning the price up very rapidly. 

The original syndicate consisted of Jay Gould, Arthur 
Kimber, representing Stern Brothers, of London, and W. S. 
Woodward, of Bock Island corner notoriety. The two latter, 
however, sold out their interest to Gould, who directed the 
deal to the end, with the assistance of several able and 
wicked partners. Their office was located in Broad street, 
on the present site of the Drexel Building. 

When the excitement arising from the above causes wa3 
at its height, I sent a telegram to Secretary Boutwell, and 
one to President Grant, representing the exact condition of 
affairs in Wall street, and urging the sale of gold without 
delay. I also prevailed upon General Butterfield, the New 
York Sub Treasurer, and Moses H. Grinnell, the Collector 
of the Port, to send similar telegrams, which they did, and 
timely action was taken at once by an order coming tc 
sell $5,000,000. The moral effect of this Government action 
was to strike terror to the holders of gold, and a general 
rush was made to sell out, thereby driving down the premium 
from 160, in less than two hours, to 132. The down grade 
produced an excitement quite equal to the early furore in 
the up movement. Albert Speyer had from Fisk a verbal 
carte blanche order to buy, in million lots, all the gold he 
could get at 160 ; while he was thus buying millions upon 
millions at this figure, on the opposite side, and in other sec- 
tions of the room, sales were freely made in moderate amounts 



MY TELEGRAM TO BOUTWEU, AND GRANT. 183 

at 140, 145, 147 and 150, almost simultaneously ; and even 
when 135 was reached, which was soon thereafter, Speyer 
still kept on bidding 160 for a million at a time, making one 
of the wildest and most ludicrous spectacles ever witnessed 
among men not idiots. Fisk afterwards repudiated the con- 
tracts made on his account by Speyer & Belden, simply de- 
nying having given the orders, and as they were not in writ- 
ing, they could not well be proven, hence both brokers failed, 
throwing immense losses upon an innumerable number of 
others. Quite a noted firm sold Speyer some of his million 
lots, which they bought back at 140, being satisfied with the 
profit of 20 per cent. ; when they had finished buying, the 
price instantly broke to 132, and the announcement of Spey- 
er's failure, which was made before the close of the day, 
caused them also to fail, as well as half the members of the 
Gold Room. Owing to the serious complications prevailing, 
and the disaster being so widespread, it was found impossi- 
ble to continue the clearances through the Gold Bank, and 
the Governing Committee of the Gold Boom were at once 
convened, and passed a resolution to suspend all dealings in 
gold for one week, in order to enable the members to adjust 
their difficulties and differences between themselves pri- 
vately. The Gold Bank also suspended business in the 
meantime. While Albert Speyer was vigorously buying and 
continuing to bid 160 for one million after another, the 
clique were as actively engaged in selling all the market 
would take at ten points less, and also busy making private 
settlements with the shorts. 

As the transactions were purely phantom in their nature, 
the great parties in the speculative contest did not really lose 
much. Contrary to popular opinion about such transactions, 
they did, virtually, incur heavy losses, but in one way or an- 
other they managed to evade them. Gould's losses were 
estimated at over four millions. Fisk's were equally large, but 
he repudiated all of them. Others were heavily saddled, 
however, with the burden which he should have borne. 



."384 the true story of bi,ack Friday. 

Importing merchants were among the greatest sufferers, 
and a large number of them were forced to cover at high 
figures. 

The suspension of the Gold Board caused many important 
failures. Private settlements were made during a period of 
sixty days following, in many instances on the basis of a 
compromise. 

When Fisk heard that Secretary Boutwell had ordered 
gold sold, he exclaimed that it would knock spots out of 
phantom gold, and send him and others with their long 
stuff " where the woodbine twineth." The full effect of the 
disaster became more fully realized when the Gold Board 
and Gold Bank suspended and the numerous large failures 
were announced ; then it almost seemed that a general state 
of chaos reigned, and how to unravel the complications was 
the problem to be solved. No one that had any connection 
with gold dealings during the eventful day could positively 
tell how they actually stood, or how to estimate their losses 
or gains; such was the uncertainty as to future results, 
and the doubt as to who was, and who was not, going to 
pay the differences due. The Board Room was crowded 
almost to suffocation, and the scene just prior to its close 
partook of the appearance of Bedlam let loose ; in fact, it 
had not been much different during the entire day. Late 
in the afternoon, a formidable body of enraged sufferers 
assembled at the doors of Smith, Gould & Martin's office, 
and many and boisterous were the threats that were in- 
dulged in against the members of the firm, in consequence 
of which a police guard was detailed for their protection. 

The gold furore brought many Israelites to Wall Street, 
who since, by their numbers and natural shrewdness, have 
become quite formidable in our midst. 

One of them, being very long of the precious metal, on its 
break from 160 to 140, fainted ; water was soon obtained to 
bathe his feverish brow, and rubbing was also adopted. 
When, finally, he had sufficiently recovered to raise his head 



THE HEBREW WHO FAINTED. 185 

and open his eyes, looking all around he said : " What ish 
the prish now? " Upon finding it still lower, he closed his 
eyes again, and fell into another swoon. He was finally 
carried from the Gold Eoom a sick and ruined, but a wiser 
Hebrew, and is now in the "ole cloe" business on the East 
side. 

This is the history in brief, but the scenes and incidents 
of that day would furnish material for an interesting 
volume. 

Although I am not much given to the sensational, I have 
collected a few of the leading events in detail, which I think 
are worth putting in permanent form, if I may presume that 
this book itself may happily partake of that character. 

The inside history of the conspiracy to put up the price 
of gold is also full of interesting material, and shows how 
deeply laid the scheme was to take advantage of the circum- 
stances and of the feeling which existed in favor of stimu- 
lating our exports at the time. I shall, therefore, give an 
epitome of the salient points behind the scenes of the great 
speculative plot, and the bold attempt made to involve 
President Grant and his family in the conspiracy. 

As I have intimated, Jim Fisk, Jr., or Jim Jubilee Junior, 
as he was then popularly called, was eventually put forth as 
the active member of the manipulating coterie. The clique 
made very good use of him, also, at intervals during the 
period they were concerting their plans. 

Fisk had originally been a peddler in New England, as his 
father had been. He appeared in Wall Street a few years 
previous to the great gold conspiracy as one of the confi- 
dential men of Daniel Drew. Having shown that he was 
too sharp for some of the people in the broker's office 
where Mr. Drew made his headquarters, he received a polite 
hint that his presence there was undesirable. Mr. Fisk 
then opened an office of his own, and united his specula- 
tive fortunes with those of Mr. William Belden. The name 
of the firm was Fisk & Belden. It was of but short duration. 



186 THE TRUE STORY OF BI<ACX FRIDAY. 

It seems that they had difficulty in finding bankers to 
accommodate them to the extent required, and they closed 
up the business. But though Fisk failed of success in this 
instance as a broker, his resources were not by any means 
exhausted. He made himself generally useful to Mr. Drew, 
who still adhered to him. 

As the result of this friendship and his own smartness, 
in a short time afterwards Mr. Fisk was elected to the 
directory of the Erie Eailroad Company, and Mr. Drew, 
who had forwarded his interest in that direction, was left 
out. This is an instance of the way Fisk made the best 
use of his friends. 

As the result of Fisk's election to the Erie Board, forty 
thousand shares of new stock were issued. Bold attempts 
were made to gobble up other railroads through the same 
instrumentality. Fuller information on these matters is 
given in my chapters on Drew, Gould, and the struggle with 
Vanderbilt. 

Fisk began to be considered a universal genius at that 
time, and had acquired the soubriquet of Prince of Erie. 
Though he had no money to operate with when he made 
his debut in Wall Street, soon after this large issue of Erie 
stock, he began to show signs of wealth very rapidly. He 
had the reputation of being the fortunate owner of several 
railroads and steamboats, an opera house, at least one bench 
of judges, an unlimited number of lawyers and a bevy of 
ballet girls. 

The Head Centre of this gold conspiracy needs no intro- 
duction here, as I have attempted to do him ample justice 
in another chapter. He was also the power behind the throne 
in Erie as well as in the Gold clique. He pulled the wires 
while Fisk was the imposing factotum who was exhibited to 
an admiring public. He managed the courts, the judges 
and the lawyers, while Fisk got the reputation of doing 
this fine work, but was simply the mechanical executive. 
He had made himself solid with the Legislature also, and 



THE HEAD CENTRE OF THE CONSPIRACY. 187 

had acquired a hold on Erie that enabled him to use that 
property just as he pleased for his own personal benefit, 
ambition and purposes. 

Erie was a mighty power at that time, with a wonderful lev- 
erage for raising money. When cash was needed to purchase 
another railroad, a legislature or a court, all that was neces- 
sary was to sell a few hundred thousand of Convertible Bonds 
and turn them into Erie shares. Mr. Gould was thus forti 
tied with ample means of raising money on call at the time 
he played the heavy role in the events which culminated in 
the disaster of Black Friday. 

Though the circumstances at that time were all in favor 
of success in such a plot, it required a mind with great 
grasp and wonderful powers of generalization to take ad- 
vantage of all the bearings of the situation, and to utilize 
everything toward the great end in view. Gould did his 
work as chief of the conspiracy with rare tact and mar- 
vellous sagacity. 

A resume of the conspicuous points in the situation and 
the plot will make this clear. 

The supply of gold in the New York market then did not 
exceed 25 millions. The Government held less than 100 
millions, and about one-fourth of this was in the form of 
special deposits represented by gold certificates, part of 
which were deposited in the banks and the remainder cir- 
culating throughout the country. Gold was then being sold 
by the Treasury at the rate of a million a month, in accord- 
ance with a plan that had been adopted as the best financial 
policy, both for the administration and the prosperity of 
the country. This had always a tendency to keep the price 
down, but on account of the circumstances briefly related 
in the beginning of this chapter, this policy of selling gold, 
owing to our commercial relations, was no longer considered 
for the best interests of the country, and Mr. Boutwell, with 
his coadjutors in the Treasury, were bound to give ear to the 
opinions of the bankers and business men in the interest of 
our export trade. 



188 THE TRUE STORY OP BI,ACK FRIDAY. 

Although the policy of stopping the sale of gold had been 
agreed upon in deference to the views of the best financiers 
of the country, yet Mr. Gould and his fellow strategists 
thought it was best to make assurance doubly sure on this 
point, in order that nothing might stand in the way of the 
great speculative intrigue, to get a " corner " in gold. Presi- 
dent Grant was conservative on the subject. The conspira- 
tors, therefore, conceived the design of arranging things so 
that Secretary Boutwell could not depart from this policy, 
no matter what emergency might arise. 

This bold and wicked strategy could only be successful 
by first getting President Grant convinced that the theory 
of stopping the gold sales was the only commercial salva- 
tion for the country in the then condition of business stag- 
nation and the possible panic threatened. The theory was 
then to impress him with the necessity of giving Secretary 
Boutwell an absolute order not to sell gold, and afterwards 
to fix things so that it would be impossible for the President 
to revoke that order until the brilliant speculative purposes 
of the clique in cornering gold should be accomplished. 

The scheme was but little short of treason, regarded from 
a patriotic point of view, and it is very questionable if the 
perpetrators would have stopped short of this dastardly act, 
had they not been convinced that their purpose was fully 
compassed by a method less villainous and shocking. It 
was considered indispensable by the conspirators, for the 
consummation of their plans, that Grant should be got out 
of the way by some means or other. Fortunately for him, 
and for the honor of the nation, the plan succeeded without 
the necessity of offering him any violence. 

Before explaining how this was done it is necessary to 
describe briefly a few of the preliminary events which 
formed a portion of the plot. 

It was arranged that General Grant should accompany a 
party, one beautiful evening in the middle of June, who 
were going to attend the great Peace Jubilee of Patrick 



THE PI£>T TO ENTRAP THE PRESIDENT. 189 

Sarsfield Gilmore in Boston. Jim Fisk did the executive 
work in the arrangement. There was a fine champagne 
supper on board the Boston boat, and several gentlemen 
were present who were thoroughly conversant with financial 
questions, and could talk glibly on the state of the country. 
The subject of exports and the policy of stopping the sale 
of gold were thoroughly discussed. It was a feast of reason, 
and those who have imagined that it was all flow of soul, 
on that festive occasion, do very scant justice to the intel- 
ligence that was at the bottom of the deep design of the 
nocturnal excursion, planned by Gould, Fisk & Co. General 
Grant was an eager listener to all that was said on the most 
interesting subject of that day, but his mind, it would seem, 
was not then thoroughly made up that the best policy for 
the prosperity of the country was to stop the sale of gold. 
He was undecided on that point, and it required well di 
rected reasons to convince him. Mr. Gould observed this 
and foresaw what was necessary to be done. The drift of 
the conversation, when this point was brought clearly out, 
was very succinctly described by Mr. Gould in his testi- 
mony before the Garfield Investigating Committee. He said : 
"The President was a listener. The other gentlemen were 
discussing. Some were in favor of Boutwell's selling gold, 
and some were opposed to it. After they all interchanged 
their views, some one asked the President what his views 
were. He remarked that he thought there was a certain 
amount of fictitiousness about the prosperity of the country 
and the bubble might as well be tapped in one way as 
the other. That was the substance of his remark. He 
asked me what I thought about it. I remarked that I 
thought if that policy was carried out it would produce 
great distress and almost lead to civil war ; it would pro- 
duce strikes among the workmen, and the workshops, to a 
great extent, would have to be closed ; the manufactories 
would have to stop. I took the ground that the Govern- 
ment ought to let gold alone, and let it find its commercial 



190 THE TRUF, STORY OF BLACK FRIDAY. 

level ; that, in fact, it ought to facilitate an upward move- 
ment of gold in the fall. The fall and winter is the only 
time that we have any interest in. That was all that oc- 
curred at that time." 

It may be necessary to observe that I am merely quoting 
Gould from the report, and am not by any means responsible 
for his confusion of ideas and grammar. 

This is sufficient to show how ably Mr. Gould played his 
part in attempting to get the President into the proper 
frame of mind to enable him to endorse a policy so vital to 
the interests of the country and to the success of the gold 
clique. 

<4 1 took the ground," says Gould, " that the Government 
ought to let gold alone and let it find its commercial level." 

This reference to "its commercial level" is rich, coming 
from the head-centre of the plotters who wanted to put the 
article up to 200. Then, in another afterthought, he says : 
" It (the Government) ought to facilitate an upward move- 
ment of gold in the fall." 

How artfully insinuating was this suggestion in the in- 
terest of our foreign commerce ! It showed clearly the power 
the man possesses of rising to the patriotic height of the 
occasion. This is a characteristic of Mr. Gould that few 
people know how to appreciate at its true worth. It has 
stood out conspicuously in his character in many other 
exigencies. It reminds one of the unkind but vigorous 
remark of the famous old English critic, Dr. Samuel 
Johnson : " Patriotism, Sir," said the old cynic, u is the last 
refuge of a scoundrel." 

About the time the above events were transpiring, the 
Assistant Secretary of the Treasury, Mr. H. H. Van Dyck, 
resigned his office in this city. Mr. Gould's chief ambition 
at that time was to name his successor, in order that he 
might be able to control the Treasury when the time to get 
a " corner" in gold should be ripe. Mr. Abel E. Corbin came 
in quite handy at this juncture to help to further the designs 



GOUI.D TRIES TO CONTROL THE TREASURY. 191 

of Mr. Gould. He was a man of fair education and con- 
siderable experience both in business and politics. He had 
been a lobbyist in Washington for some years. He was 
well informed on financial matters, a pretty good writer, and 
could il talk like a book." His wife was a sister of Mrs. 
Grant, and he had good opportunities for reaching the Pres- 
idential ear, which he employed to the best advantage. 

A gentleman named Robert B. Catherwood, who was 
married to a step-daughter of Mr. Corbin, was approached 
by Gould and Corbin on the subject of the assistant- 
treasuryship. They were anxious that Mr. Catherwood 
should take the office, and told him he could make a great 
deal of money in a perfectly legitimate manner if he were 
once installed. 

So Mr. Catherwood stated in his testimony before the 
Investigating Committee, but he adds, " My ideas differed 
from theirs in what constituted a legitimate manner, and I 
declined the office." 

The office then sought another man in the person of 
General Daniel Butterfield. He received the intimation of 
his appointment in a very different spirit from Mr. Cather- 
wood, showing that he was fully equal to the occasion. He 
wrote a letter to Mr. Corbin thanking him kindly for the 
offer, saying that he was under numerous obligations to 
him, and expressing a hope that he would be eminently 
successful in his undertaking. General Butterfield received 
his commission in due course. 

This made perfect another link in the chain of Mr. Gould's 
speculative design, as he supposed. It made Corbin "solid" 
with Gould also, a position which they both highly appre- 
ciated. Mr. Gould paid the following tribute of admiration 
to the true value of Corbin in the enterprise : " He was a 
very shrewd old gentleman. He saw at a glance the whole 
case, and said he thought it was the true platform to stand 
on; that whatever the Government could do legitimately and 
fairly to facilitate the exportation of breadstuffs and produce 



192 THE TRUE STORY OF BI.ACK FRIDAY. 

good prices for the West, they ought to do so. He was 
anxious that I should see the President, and communicate to 
him my views on the subject." Corbin talked with Grant 
until he received a positive assurance that Boutwell was not 
to sell any more gold. At a meeting in Grant's house, 
where Gould and Corbin were present, the President said : 
" Boutwell gave an order to sell gold, and I heard of it, and 
countermanded the order." 

It was not until Gould had received positive assurance 
from the President's own lips, that he considered his scheme 
perfect. But the links of this strategic chain were now 
nearly all forged. The bankers and merchants were largely 
in his favor through commercial necessity, the Sub-Treasury 
was " fixed," as he thought, and the Executive fiat had placed 
the Treasury of the United States itself where it could not 
spoil the deal if Grant did not change his mind. There 
were reasons, of course, to apprehend that he would do so 
in case of an emergency ; for he never was privy to the 
scheme, no matter what his traducers and political enemies 
may have said. 

To ensure perfect safety, then, Grant must be put out of 
the way temporarily. This was the crowning effort of the 
conspirators. After the Boston Peace Jubilee, this Cabal 
spent the remaining part of the summer in maturing its de- 
signs. Large enterprises of this nature always require time 
and patience. I am told that " Billy" Porter, u Sheeny" 
Mike and other eminent burglars will work assiduously 
from six to twelve months studying all the ins and outs of a 
bank or other financial concern before coming to the point 
of using the u jimmy," blowing the safe or chloroforming 
the janitor. 

It seemed necessary that all the members of the Cabal 
should be fully acquainted with the combination to Grant's 
purposes as regarded his orders to Boutwell, and that his 
ideas should remain fixed on the theory of increasing export- 
tation for the country's safety. Accordingly it was arranged 



GRANT NOT PRIVY TO TH3 PI.OT. 



193 



tliat Jim Fisk should visit the President at Newport, where 
he was on a visit, some time about the middle of August, a 
month or so prior to Black Friday. It would seem that Grant 
at this date was still wavering, and adhering to his policy 
of selling gold in spite of the order which he had given 
Boutwell. He may have been suspecting that the anxiety 
of Gould, Corbin & Co. for the prosperity of the country 
was not altogether genuine. The necessity of bringing 
further pressure to bear upon him was therefore clearly 
manifest. 

Keferring to the interview at Newport, Fisk said : " I 
think it was some time in August that General Grant 
started to go to Newport. I then went down to see him. I 
had seen him before, but not feeling as thoroughly ac- 
quainted as I desired for this purpose, I took a letter of 
introduction from Mr. Gould, in which it was stated that 
there were three hundred sail of vessels then on the Medi- 
terranean, from the Black Sea, with grain to supply the 
Liverpool market. Gold was then about thirty-four. If it 
continued at that price, we had very little chance of car- 
rying forward the crop during the fall. I know that we 
felt nervous about it. I talked with General Grant on the 
subject and endeavored, as far as I could, to convince him 
that his policy was one that would only bring destruction on 
us all. He then asked me when we should have an inter- 
view, and we agreed upon the time. He said : ' During 
that time I will see Mr. Boutwell, or have him there." 

The President was carefully shadowed after this by the 
detectives of the clique, and great care was taken to throw 
men across his path who were fluent talkers on the great 
financial problem of the day, the absolute necessity of stimu- 
lating the export trade and raising the premium upon gold 
for that patriotic purpose. In this way, President Grant 
began to think that the opinion of almost everybody he 
talked with on this subject was on the same side, and must, 
therefore 3 be correct. 



194 thb truf, story of bi,ack Friday. 

About the 1st of September it was considered that the 
opinions of the President had been worked up fairly to the 
sticking point, and Gould bought $1,500,000 in gold at 132^ 
for Corbin. Gould, however, was timid in his purchasing 
at first, as he had heard that a number of operators who 
were short of gold were making arrangements to give Secre- 
tary Boutwell a dinner. On further assurances from Corbin 
that the President had written Boutwell to sell no gold with- 
out consulting him, Gould prepared to go ahead with the 
execution of his great scheme. Nothing remained to be 
done in the completion of the plot except to stow away the 
President in a place of safety until the financial storm should 
blow over. 

Things were so managed that the President was placed in 
a position that his honor was seriously in danger of being 
compromised, yet so ably was the matter engineered that he 
was perfectly unconscious of the designs of the plotters. 

He was prevailed upon to go to a then obscure town in Penn- 
sylvania, named Little Washington. The thing was so ar- 
ranged that his feelings were worked upon to visit that place 
for the purpose of seeing an old friend who resided there. 
The town was cut off from telegraphic communication, and 
the other means of access were not very convenient. There 
the President was ensconced, to remain for a week or so 
about the time the Cabal was fully prepared for action. 

Sometime about the period of the President's departure 
for Little Washington, Fisk bought seven or eight millions 
of gold. Gould then said to Fisk : " This matter is all fixed 
up. Butterfield is all right. Corbin has got Butterfield all 
right, and Corbin has got Grant fixed all right, and in my 
opinion they are all interested together." 

This was patriotism with a vengeance. Just think of the 
audacity of it ! Gould enters into a scheme to place the 
President in a position where he could not interfere with the 
plan of getting a " corner" in gold, and then he turns around 
and accuses the first Magistrate of the Kepublic with being 
privy to a plot that was calculated to create a panic, and 



PUTTING THE PRESIDENT OUT OF THE WAY. 195 

cause widespread disaster in business circles, and render 
him an object of universal contempt. 

Gould and Fisk, through Corbin, also attempted to com- 
promise Grant's family, as well as his private Secretary, 
General Horace Porter. This intention was fully disclosed 
through the interview of Fisk with Corbin. Fisk testified : 
" When I met Corbin he talked very shy about the matter 
at first, but finally came right out and told me that Mrs. 
Grant had an interest ; that $500,000 in gold had been 
taken at 31 and 32, which had been sold at 37 ; that Mr. 
Corbin held for himself about two millions of gold, $500,- 

000 of which was for Mrs. Grant and $500,000 for Porter. 

1 did not ask whether he was General or not. I remember 
the name Porter. This was given out very slowly. He 
let out just as fast as I did when he found that Gould had 
told me about the same thing. I said : ' Now, I have had 
nothing to do with your transactions in one way or the 
other. We have embarked in a scheme that looks like one 
of large magnitude. Mr. Gould has lost as the thing stands 
now. It looks as if it might be a pretty serious business 
before getting out straight again. The whole success de- 
pends on whether the Government will unload on to us or 
not/' He said : ' You need not have the least fear.' I said : 
' I want to know whether what Mr. Gould told me is true. 
I want to know whether you have sent this $25,000 to Wash- 
ington, as he states ?' He then told me that he had sent it, 
that Mr. Gould had sold $500,000 in gold belonging to Mrs. 
Grant, which cost 32, for 37 or something in that neighbor- 
hood, leaving a balance in her favor of about $27,000, and 
that a check for $25,000 had been sent. Said I : < Mr. Cor- 
bin, what can you show me that goes still further than your 
talk V l Oh, well,' the old man said, ' I can't show you any- 
thing, but,' said he, i this is all right.' He talked freely and 
repeated : * I tell you it is all right.' When I went away 
from there, I had made up my mind that Corbin had told 
me the truth." 



196 THK TRU4 STORY OF BLACK FRIDAY. 

An attempt was made to prove, before the Garfield Com 
mittee, that a package containing $25,000 was sent to Mrs. 
Grant through the Adams Express Company, but expert 
testimony failed to decide whether the amount was that or 
$250, as the two noughts at the extreme right were crowded 
into the cents column, and it was difficult to determine 
whether or not a very light " period " was placed between 
them and the " $250." 

The design of the clique was manifest, however, to impli- 
cate the family of the President in some way or other, in 
order that they might make use of the Executive influence 
to help accomplish their great speculative purpose. But as 
the Garfield Committee truly said in its report : " The 
wicked and cunningly devised attempt of the conspirators 
to compromise the President of the United States or his 
family utterly failed." 

The scheme might have succeeded if Fisk had been pos- 
sessed of the coolness and penetration of his partner, but 
his impetuosity, anxiety and enthusiasm aroused suspicion 
and partially spoiled the plot. 

Fisk was so eager to be satisfied that Grant was all right 
that he overdid the thing by urging Corbin to write Grant 
a letter to stand firm and not to permit the Treasury to sell 
gold under any consideration. The outcome of this afforded 
clear proof, if any were wanting, that Grant had no guilty 
knowledge of the base purposes for which he was being used. 
Fisk had this letter from Corbin sent by a special messenger 
from Pittsburgh, who rode twenty -eight miles on horse- 1 
back, and delivered it in person to the President. He read 
the letter, and had his suspicions at once aroused. He said 
laconically to the messenger, " It is satisfactory ; there is no 
answer." He began to see through the game, and at 
once desired Mrs. Grant to write to Mrs. Corbin requesting 
her husband to have nothing more to do with the Gould-Fisk 
gang. 

Mrs. Grant wrote to Mrs. Corbin to say that the President 



GRAN? REPUDIATES THE GOUI.D-FISK GANG. 197 

was greatly troubled to learn that her husband had been 
speculating in Wall Street, and that she should desire him 
to disconnect himself immediately with the party who were 
attempting to entrap the President. 

Corbin hastened to obey the mandate from Little Wash- 
ington. He was greatly agitated, but the ruling passion of 
avarice was strong ; in bidding Gould farewell, and before 
taking his final adieu of the clique, he requested the arch 
plotter to hand him over his share of the profits. Kef erring 
to this incident, Gould said : "I told him I would give 
$100,000 on account, and that when I sold, if he liked, I would 
give him the average of my sales. I did not feel like buy- 
ing any gold of him then." 

This was the denouement of the plot against the Presi- 
dent, who immediately hastened to big Washington. 

Now, let me again ask the reader to turn his attention for 
a moment to the concluding scenes in the speculative drama 
in Wall Street on Black Friday. How the clique tried to 
manipulate Assistant- Secretary Butterfield was kept as pro- 
foundly secret as possible, and as it turned out, he did not 
have as much power over the events of that great day as was 
expected. When somebody charged Fisk with tapping the 
telegraph wires, however, to obtain information from the 
Government, he replied : " It was only necessary to tap 
Butterfield to find out all we wanted." 

This was very likely a vain boast of Fisk. 

On Wednesday, the 22d September, two days preceding 
Black Friday, the clique, it is believed, owned several millions 
more gold than there was in the city outside the vaults of 
the Sub-Treasury. Belden bought about eight millions of 
gold on that day ? while Smith, Gould, Martin <&; Co were 
also heavy purchasers. The clique held a caucus in the 
office of William Heath & Co., in Broad street, and con- 
sluded that it had gold enough to put the price to 200, if it 
sould carry the gold without lending and compel the " shorts" 
io purchase. But the idea of finding a market for over thirty 



198 TH^ TRUF STORY OF BIvACK FRIDAY. 

millions of gold was also a gigantic problem, and they felt 
the risk of being ground between the upper and the nether 
millstones of their scheme. 

On the morning of Thursday another council of war was 
held in the office of Belden & Co., on Broadway. At this 
meeting, Gould, Fisk, Henry N. Smith and William Belden 
were present. The proceedings of this meeting were kept 
a profound secret, but one result of it was that Belden gave 
his clerk the famous order to put gold to 144 and keep it 
there. On that day Belden purchased about twenty millions 
of gold, the price opening at 141^ and closing at 143J. 

The chiefs of the Cabal had another private meeting up 
town that evening. The great question of closing up the 
transactions on the following day was the chief topic of 
discussion. These operators held contracts for over $100,- 
000,000 in gold. Gould said that the " short v interest was 
$250,000,000. The total amount of gold in the city did not 
exceed $25,000,000, and the difference between this and the 
aggregate amount of the contracts of the clique was the 
enormous amount that would have to be settled in the event 
of a u corner." 

Fisk proposed that the clique show its hand, publish the 
state of affairs, and offer to settle with the shorts at 150. 
His plan was rejected by his brother conspirators. 

On the morning of the fatal day, Belden and William 
Heath had an early breakfast together at the Fifth Avenue 
Hotel, and repaired immediately to their offices. Belden 
announced that gold was going to 200. "This will be the 
last day of the Gold Boom," he added. Moved by Belden's 
threat, a large number rushed to cover. In the language of 
Henry N . Smith, " They came on with a rush to settle." He 
was settling in the office of Smith, Gould & Martin, at 150 
to 145, while Albert Speyer, acting as broker for Fisk and 
Gould, was bidding up to 160 for a million at a time. It 
was only when the price came down to 133 that Speyer 



CLOSING SCENES OF THE DRAMA. 199 

realized the humorous absurdity of his position. He had 
then bought 26 millions since morning at 160. 

A voracious demand for margins about midday brought 
the work to a crisis. The scene at the office of Heath was 
indescribable when Belden went there to see Gould and his 
confederates, to find out what was to be done next with the 
frenzied purchasers. An eye-witness thus describes the 
scene at Heath's office : " I went outside while Belden went 
in. I walked up and down the alley -way waiting for him to 
come out. Deputy sheriffs, or men appearing to be such, 
began to arrive and to mount guard at Heath's office to keep 
out visitors. After waiting a prodigious long time, as it 
seemed to me, Jay Gould came creeping out of the back 
door, and looking round sharply to see if he was watched, 
slunk off through a private rear passage behind the build- 
ings. Presently came Fisk, steaming hot and shouting. He 
took the wrong direction at first, nearly ran into Broad 
street, but soon discovered his error, and followed Gould 
through the rear passage. Then came Belden, with hair 
disordered and red eyes, as if he had been crying. He 
called : c Which way have they gone V and, upon my point- 
ing the direction, he ran after them. The rear passage led 
into Wall street. At its exit the conspirators jumped into 
a carriage and fled the Street." 

They did not fly the Street, however, but went to the 
Broad street office of Smith, Gould & Martin, where the 
crowd assembled, evidently with riotous intent, apparently 
bent upon an application to Judge Lynch for justice ; and 
had any of the gentlemen appeared outside the confines of 
the front wall, the chances were that the lamp-post near by 
would have very soon been decorated with a breathless 
body. To ensure their safety inside, however, a small police 
force kept guard outside, which made the barricade com- 
plete. These gentlemen remained under this shelter until 
the small hours of the morning, busily endeavoring to find 
out where they stood in the result of the gold deal, and the 



200 THF, TRUE STORY OF BI,ACK FRIDAY. 

more they pondered over it, the greater grew the doubt in 
their minds whether they were standing on their heads or 
their heels. 

Although the Black Friday "corner" was a temporary 
calamity, perhaps it was worth all it cost, in teaching us a 
useful lesson in financial and speculative affairs. In my 
chapter on "Panics, and How to Prevent Them," I think I 
have made several points clear that can be utilized by finan- 
ciers, speculators and investors to advantage, in case of an 
impending panic or "corner." 



CHAPTER XXI. 

CAUSES OF LOSS IN SPECULATION. 

Inadequate Information. — False Information.— Defects 
of News Agencies. — Insufficiency of Margins. — 
Dangers of Personal Idiosyncrasies. — Operating in 
Season and out of Season. — Necessity of Intelli 
gence, Judgment and Nerve. — An Ideal Standard.— 
What Makes a King Among Speculators? 

AS there is always a class of speculators whose opera- 
tions, in the long run, leave a net result of loss 
rather than profit, it may not be amiss if I state what 
experience has taught me as to the causes of this want of 
success. 

Undoubtedly, many who enter the arena of speculation 
are in every way unfitted to take the risks against such 
wily opponents as they must encounter. They are either 
too ignorant or too wise, too timid or too bold, too pessi- 
mistic or too sanguine, two slow or two hasty, too diffident or 
too conceited, too confiding or too incredulous. These are 
constitutional defects, any one of which may easily cost an 
operator a fortune. And yet self-knowledge, with self con 
control, may prevent these natural disqualifications from 
seriously interfering with success. There is no mental dis- 
cipline more severe and exacting than that of speculation. 
There is no pursuit in which a man can less afford to indulge 
in whims, or prejudices, or pet theories, than that of stak- 
ing his money against the prospective changes in financial 
values. He must be as calm and as impartial as a judge, 
not less in respect to the risks he incurs than in regard to 
the integrity of his own judgment. I should lay it down as 
the first rule necessary to success, that the judgment be not 
warped by any natural idiosyncrasies ; this being secured 
a man may succeed in spite of his constitutional defects. 



202 CAUSES OF LOSS IK SPECULATION. 

Singular as it may seem, there are no advantages beset 
with greater dangers than information — the one thing most 
largely sought after and most highly prized. Very naturally 
most men object to taking a risk without possessing some 
knowledge of the conditions that determine the risk ; and 
yet how few take care that their knowledge is adequate 
enough or certain enough for the formation of a safe 
judgment. In some cases, knowledge is unattainable and 
the operation must be a leap in the dark ; and in such in- 
stances a man is unwise to step in unless his experience 
satisfies him that he is uncommonly sagacious in guessing. 

Many speculators lose because the information on which 
they base their operations is insufficient ; more because it 
is false ; and others because, while their information is cor. 
rect, they do not know how to turn it to account. 

Between one or other of these difficulties in the use of 
information must be distributed a very large proportion of 
the losses incurred in speculation. Incomplete or insuffi- 
cient information is especially dangerous. One-sided know- 
ledge is nowhere so deceiving as here. A railroad, for 
instance, may report an increase of gross earnings which is 
construed as making its stock worth two or three per cent- 
more than its current price ; but the improvement may be 
due to transient special causes, and the road's current expen- 
ses may be growing at a rate which makes the net increase 
show a decrease. A financially embarrased company may 
announce an assessment of its stockholders, upon which 
there is a rush to sell the stock ; a little further explanation 
shows that the proceeds of the assessment will so improve 
the facilities of the company, or so enable it to reduce its 
fixed charges, as to make the stock intrinsically far more 
valuable than it was before ; this discovery causes a sharp 
advance in the shares, and the " short" sellers have to cover 
their sales at a loss. A stock is bought up freely at New 
York because London is taking large amounts of it ; a day 
or two later, the deliveries show that large holders connec- 



*,arg:e risks on manufactured "points." 203 

ted with the management are unloading on the foreign 
market upon knowledge of facts damaging to the prospects 
of the property ; the late buyers then rush to realize, and 
'pocket a loss instead of a profit. Every day furnishes 
new instances of speculations undertaken on this incom- 
plete kind of information, and which end disastrously 
because the operators did not wait to be informed on all 
sides of the case,, but were satisfied to take a pound of 
assumption with but an ounce of fact. 

One of the strongest anomalies of speculation is in the 
facility with which men are induced to take large risks on 
false information and manufactured " points." Considering 
the readiness with which a numerous class of " outside " 
operators buy or sell on sensational rumors, it is not sur- 
prising that the professional operators should keep the 
market well supplied with such decoys ; and it is not easy 
to say which most deserves condemnation— the heedless 
credulity of the dupes, or the deliberate lies of the canard- 
makers. There is, however, a third party not less blameable 
than either of the foregoing. I refer to those who make it 
a part of their business to circulate false information. Prin- 
cipal among these caterers are. the financial news agencies 
and the morning Wall Street news sheet, both specially de- 
voted to the speculative interests that centre at the Stock Ex- 
change. The object of these agencies is a useful one ; but 
the public have a right to expect that when they subscribe 
for information upon which immense transactions may be 
undertaken, the utmost caution, scrutiny and fidelity should 
be exercised in the procurement and publication of the news. 
Anything that falls short of this is something worse than bad 
service and bad faith with subscribers ; it is dishonest and 
mischievous. And yet it cannot be denied that much of the 
so-called news that reaches the public through these instru- 
mentalities must come under this condemnation. The 
" points," the " puffs," the alarms and the canards, put out 
expressly to deceive and mislead, find a wide circulation 



204 CAUSES OF LOSS IN SPECULATION. 

through these mediums, with an ease which admits of no 
possible justification. How far these lapses are due to the 
haste inseparable from the compilation of news of such a 
character, how far to a lack of proper sifting and caution, 
and how far to less culpable reasons, I do not pretend to 
decide ; but this will be admitted by every observer, that the 
circulation of pseudo news is the frequent cause of incalcu- 
lable losses. Nor is it alone in the matter of circulating 
false information that these news venders are at fault. The 
habit of retailing " points " in the interest of cliques, the 
volunteering of advice as to what people should buy and 
what they should sell, the strong speculative bias that runs 
through their editorial opinions, these things appear to most 
people a revolting abuse of the true functions of journalism. 
But patent as these things are to those educated in the ways 
of Wall Street, there is a large class who accept such effu- 
sions as gospel, and are easily led by them into the clutches 
of the sharks. It is but just, however, to acknowledge that 
with these very serious drawbacks, both these classes of 
news agencies render valuable service to Wall Street in- 
terests, and it is to be hoped that experience will convince 
them that their enterprises would attain a higher success 
through emulating a higher standard 

Another source of losses in speculation lies in the specu- 
lator not holding back a cash reserve sufficient to protect 
him against an adverse course of prices. Ordinarily, the 
man who speculates is of a sanguine temperament, and apt 
to take risks without sufficient provision against contin- 
gencies. Hence, it is common with inexperienced operators 
to use all their available resources in their original margin. 
The result is that, if prices go against them, they are liable 
to be closed out and saddled with a loss they can ill afford. 
Such persons should never pledge more than one-half of their 
available means at the beginning of a transaction ; the re- 
maining half should be kept as a guarantee against their being 
"sold out," or to enable them to duplicate the transaction at 



CLASSES ESPECIALLY EXPOSED TO LOSSES. 205 

the changed price, so as to make an average likely to yield a 
profit. The violation of this rule creates a class of weak 
holders, who offer a constant inducement to " room- trader s " 
to raid the market ; knowing, as they do, that when they 
have impaired these unsupported margins, there is sure to 
be a rush of selling orders calculated to break down prices. 
It is safe to say that if better provisions were made for 
keeping margins good, the power of the " bears " and the 
wreckers wpuld be broken ; one-half of the losses of " out- 
side " operators would be obviated, and one-half the risks 
of speculation would be obliterated. 

Another class especially exposed to losses are those who 
always operate in the same direction. Wall Street has its 
optimists and pessimists ; they are such from a constitu- 
tional bent ; and they are a bull" or ft bear" in season and 
out of season. As a rule, those that follow a natural dis- 
position, rather than the course of the market and the 
conditions that mould it, are sure to bankrupt themselves 
sooner or later. I do not mean to maintain that there is no 
chance for an operator who clings continuously to one side 
of the market ; for in times when conditions favor higher 
prices there is always some profitable work to be done by 
the " bear" in checking excesses of a rise ; and, when events 
favor decline, the " bull" may find his chances in intervals 
of excessive decline. But the man who can thus successfully 
steer his craft against the winds and the tides must be a 
thoroughly trained navigator, cool in temperment, capable 
of reining his natural proclivities, and above all, the pos- 
sessor of means large enough to control, if necessary, the 
course of the market by sheer money power. It is needless 
to say that nine-tenths of this stereotyped class are devoid 
of these requisites to success. One cannot but pity the 
man with sallow face and sluggish gait so suggestive of the 
blue pill, who, when everybody else is feeling the happy 
impulse of a common prosperity, persists in believing that 
the country is going to the dogs, and steadily sells stocks 



20 (> CAUSES OF LOSS IN SPECULATION. 

while everybody else is buying them. He is simply ruin* 
ing himself through unconsciousness that he views every- 
thing through bilious spectacles. Equally is the man to be 
commiserated who, from a constitutional intoxication of 
hope, keeps on buying and holding when it is manifest that 
the country has passed the summit of an era of prosperity 
and is destined to a general reaction in trade and values. 
Of course, such men never remain long in Wall Street ; their 
pockets are soon emptied, and they retire to reflect on the 
folly of refusing to appreciate and to follow the natural 
drift of the conditions that regulate values. 

A minor source of losses lies in operating at times when 
the market is so evenly balanced between opposing forces 
that there is no chance for making profits. At such times, 
operators get disgusted at the sluggishness of the market ; 
they change their holdings from day to day, with no advan- 
tage except to their broker ; and their monthly statement 
shows a heavy list of charges for interest and commissions, 
with no offset of profits. These intervals of stagnancy 
sometimes run for weeks, sometimes for months ; and at 
such times a wise speculator would take care to keep out of 
the market and hold himself in readiness for anything that 
may turn up. 

It is necessary to the avoidance of loss that the operator 
should maintain an intelligent watch upon the influences 
that control the market. Those influences are two-fold — 
such as are intrinsic to the market, and such as are external 
to it. Of the former class are those that relate to the spirit 
and tone of the market ; the position and disposition of the 
cliques; the action of the large operators ; the over-loaded 
or over-sold state of the market, as indicated by the loan- 
ing rates for stocks ; the influence exerted by the upward 
or downward movements in stocks which at the moment are 
specially active ; the possibility of closing out holders on 
" stop orders" or on the impairment of margins ; the unload- 
ing of influential cliques and the covering of important lines 



AN INSTINCTIVE FACUI/TY FOR DISCERNMENT. 207 

of short sales, &c, &c. Influences of this kind are very 
frequently sufficient of themselves to control the market for 
a considerable period in direct opposition to the tendency 
indicated by external conditions. It is, however, no easy 
matter to form a correct conclusion as to the drift resulting 
from this set of factors. They are so concealed and so 
changeful, and the symptoms are so vague, that it requires 
long experience, added to unusual sagacity, to determine 
what may be the tendency resulting from the complex action 
and counteraction of this set of conditions. Some except- 
ional operators enjoy an instinctive faculty for weighing 
these shadowy indications with almost unerring certainty. 
Such men usually care little about outside influences, except 
so far as they may affect the market for the moment. From 
the nature of the case, their transactions are apt to be brief 
ones, and follow quickly the momentary course of the mar- 
ket. They are reckoned among the most sagacious specula- 
tors, and are usually very successful. But their success is 
the result of a special natural gift, and therefore cannot be 
won by others. 

The second class of influences above alluded to as external 
to the market are of a very broad and varied character. 
They embrace almost everything that affects the welfare of 
the country. Those, however, which are most potent are, 
the state of the crops ; the condition of manufacturing indus- 
tries ; the state and propects of trade ; the earnings of the 
transportation companies ; the course of the imports and 
exports ; the attitude of the foreign markets towards Amer- 
ican securities ; the movements of the precious metals ; the 
condition of the London and Continental money markets ; 
the position of the New York banks and the course of cur- 
rency movements ; the action of Congress, of the Legisla- 
tures and of the Courts on matters affecting the value of 
investments ; the acts of labor unions and the drift of labor 
agitations, and the course of political and social issues. 
This may be considered a rather startling list of topics for 
a man to keep himself well informed upon, but there is not 



208 CAUSES OF LOSS IN SPECULATION. 

one of them which may not any day become a controlling 
factor in the condition of the stock market. For a man, 
therefore, who aims to keep his knowledge abreast with his 
business, it is necessary that he should be a close observer 
of events. Undoubtedly few possess this breadth of infor- 
mation, and most men think it sufficient to get their knowl- 
edge as best they may when the events happen. The mis- 
fortune in such cases is, that those better informed utilize the 
event while the others are " getting posted." Considering 
how many half -informed or wholly ignorant persons engage 
in speculation with more or less success, it cannot be pre- 
tended that to keep informed on the foregoing set of condi- 
tions is essential to a fair degree of success. But it must 
be maintained that such knowledge is of incalculable value 
and that a man who has it is in a position to act with more 
intelligence, assurance and success than one without it. To 
those who desire to turn to account all coming changes, and 
to stand always prepared for the good or evil events of the 
future, this intelligent comprehension of the status of all the 
forces that make or unmake values is absolutely indispens- 
able. And yet it is one thing to possess this information ; 
another to know how to draw correct conclusions from it, 
and yet another to know how best to use it in the area of 
speculation. Failure at any one of these points may be 
fatal to success and result in disaster. 

I conclude, then, that for a man to be a thoroughly equip- 
ped speculator, it is necessary that he be possessed of ex- 
traordinary parts and attainments. He must be an un- 
ceasing and intelligent observer of events at large, and a 
sagacious interpreter of symptoms on the Exchange ; his 
judgment must be sound, not only as to existing conditions, 
but as to coming tendencies, and he must possess the calm- 
ness and nerve to face unflinchingly whatever emergencies 
may arise. Whoever enjoys these qualities in the highest 
degree must be the King of Speculators. As to others, their 
rank must correspond to the degree of their conformity to 
this ideal standard. 



CHAPTEE XXII. 

VILLARD AND HIS SPECULATIONS, 

Return of the Renowned Speculator to Wall Street. 
— Recalling the Famous "Blind" Pool in North- 
ern Pacific. — How Villard Captured Northern 
Pacific— Pursuing the Tactics of Old Yanderbilt. 
Raising Twelve Million Dollars on Paper Credit. — 
Villard Emerges from the '* Blind " Pool a Great 
Railroad Magnate. — He Inflates His Great Scheme 
from Nothing to One Hundred Million Dollars. — 
His Unique Methods of Watering Stock as Com- 
pared with those of George I. Seney. 

THE return of Mr. Henry Villard to Wall Street, after 
two years' absence in Germany, his native land, renews 
the public interest in the career of that bold speculator. 
My reminiscences of Wall Street affairs would be incom- 
plete without a sketch of the daring railroad operations of 
this gentleman, which so fully illustrate some of the evils 
to which I have referred in my chapter on u Railroad 
Methods." 

The culminating point in the speculative history of Mr. 
Villard, which covered a period of five years, from 1879 to 
1884, was the famous blind pool in Northern Pacific. 

Instead of taking up the events of his life in detail, and 
carrying my readers to this point, I shall depart from the 
usual course of biography, and present the more interesting 
facts of the career of my hero at the beginning. 

In his capture of Northern Pacific he seems to have 
followed the methods of the elder Vanderbilt very closely, 
with the important exception that he failed in the consum- 
mation of his purpose. Vanderbilt always, eventually, tri- 
umphed. 

Villard was the chief agent in forming the Oregon Rail- 
way and Navigation Company, which was organized for the 



210 VILLARD AND HIS SPECULATIONS. 

purpose of consolidating the business of the Oregon Steam 
Navigation Company with that of the Oregon Steamship 
Company, and for the purpose of buying, building and oper- 
ating railroads, as stated in the circular setting forth the 
objects of the company. The lines of the Oregon Eailway 
and Navigation Company extended from Portland west to 
Wallula Junction. 

The value of this property was seriously menaced by the 
project of the Northern .Pacific to extend its lines west, 
with a terminus at Tacoma. 

President Billings, of the Northern Pacific, rejected a 
proposition from Mr. Villard to accommodate the Northern 
Pacific by permitting it to reach the Pacific coast over the 
lines of the Oregon Eailway Navigation Company. 

It was at this juncture that Villard resorted to the old Van- 
derbilt tactics, by attempting to purchase stock enough of 
the Northern Pacific to enable him to control the property. 
For this purpose he formed a blind pool, in which Messrs. 
Woerishofler, Pullman and Endicott, and a host of other 
solid men, were the original members. A fund of $8,- 
000,000 was subscribed to purchase Northern Pacific 
stock. During the spring of 1881 the pool kept on buying 
steadily, and continued their operations until the middle of 
summer, when it was discovered that the treasury of the 
pool was almost exhausted without having effected its 
purpose of acquiring control of the Northern Pacific 
property. 

Mr. Villard then called a meeting, explained matters, 
proposed to extend the scope of the pool's operations, and 
to increase its membership. By showing the enormous 
profits to be gleaned in the future, he succeeded in getting 
$12,000,000 more subscribed. This secured the control 
of the road, and in September, 1881, Mr. Villard was 
elected President of Northern Pacific. 

Villard at once emerged from this blind pool into a great 
railroad magnate, in a manner, to the eye of the general 



A MODERN MONTE CRISTO. 211 

public, as miraculous as the springing forth of Minerva 
fully armed from the brain of Jupiter. 

The stock of Northern Pacific advanced rapidly in price, 
and Villard and his friends were supposed to be accumu- 
lating millions with unprecedented celerity. Villard ap- 
peared to have realized all the financial dreams of Monte 
Cristo, and he was fast looming up into a proud and dan- 
gerous rival of Gould, Vanderbilt and Huntington. 

He went forward with the building of the Northern 
Pacific road, which was finished two years after his success 
in capturing it through the medium of his blind pool. His 
phenomenal success induced him to enter largely into the 
extension of other investments. He became lavish in his 
personal expenses also, although he had formerly been 
accustomed to the closest economy in his mode of living, 
and he built a palace at Madison Avenue and Fiftieth 
street. 

When seemingly on the highest tide of prosperity, Vil- 
lard suddenly became embarrassed, and when an accounting 
of the cost of finishing the road was made, he was found to 
be away behind. There was a miscalculation of $20,- 
000,000 somewhere. Villard explained it by declaring that 
the estimate of the engineers for finishing the road was 
$20,000,000, whereas the real cost reached $40,000,000. 

For the $20,000,000 subscribed by the blind pool the sub- 
scribers received the stock of the Oregon & Transcontinen- 
tal. This company had been organized to build branch 
lines to the Northern Pacific, as the charter of the latter did 
not permit it to build such lines. 

This is the speculative history, in brief, of Mr. Villard 
from the time he took hold of the Oregon & California Rail- 
road up to the juncture of his grand collapse. There were 
several incidents, however, of more than ordinary interest 
in his railroad history prior to the time he set his heart upon 
Northern Pacific. As a stock- waterer he had, probably, no 
superior, and was only equalled by Mr. George I. Seney, in 



212 VIZARD AND HIS SPECULATIONS. 

that important department of railroad management. His 
methods in obtaining control of the Oregon Steam Naviga- 
tion Company and the Oregon Steamship Company amply 
illustrate his remarkable ability in this respect. When 
Villard proposed to purchase these two companies he had 
no money, but he had unlimited confidence in his own 
ability. He asked each company to give him an option 
to run a year for $100,000. They agreed to do this, and 
Villard forthwith consulted a number of capitalists, who 
came together and filed articles of incorporation of the 
Oregon Railway & Navigation Company, a consolidation of 
the two companies above-named. When this company, with 
such a high sounding name, was organized, it had no assets, 
and the prospects of acquiring any seemed exceedingly blue. 
The names of the incorporators were as follows: Henry 
Villard, James H. Fry, Artemus H. Holmes, Christian Bors, 
W. H. Starbuck and Charles E. Brotherton, all of the city 
and State of New York, and W. H. Corbett, C. N. Lewis? 
J. N. Dolph, Paul Schulze and N. Thielson, all of Portland, 
Oregon. The capital was nominally six million dollars, 
divided into 60,000 shares. This arrangement was made in 
June, 1879. 

The next problem to be solved after the reorganization 
was how to raise money to run the concern. 

The Board of Directors, under the management of Mr. 
Villard, were equal to the occasion. They met at Portland 
a few days after the organization and executed a mortgage 
to the Farmers' Loan and Trust Company of New York, and 
under this mortgage issued 6,000 bonds of $1,000 each, pay- 
able in thirty years after July 1, 1879, with interest at 6 per 
cent. 

Mr. Villard then paid the $100,000 bonus money to the 
companies which had been incorporated, took his option, 
stock and bonds and came East to negotiate his securities. 
It is said he presented them to Jay Gould, who refused to 
touch them, as he believed there was not much stamina in 



THERE WERE MILLIONS IN IT. 213 

the scheme, and he wished to avoid trouble with the Northern 
Pacific, which he plainly saw the project involved. Villard 
was more fortunate with Mr. Endicott, Jr., of Boston, Mr. 
George Pullman and others whom they interested in the 
enterprise. 

The property of the two companies, out of which the new 
company had been formed, whose securities were so boldly 
placed upon the market, was not in reality purchased until 
March of the following year. 

After the organization was complete, the visible assets of 
the Oregon Railway and Navigation Company did not ex- 
ceed $3,500,000, while the total liabilities amounted to 
$21,000,000. This was made up as follows : 

Original stock $6,000,000 

Water 3,000,000 

Water 6,000,000 

Mortgage bonds 6,000,000 

It will thus be seen that there were seven dollars of lia- 
bilities for every dollar of assets, and the intrinsic value of 
the stock was represented by a minus quantity of 20 per 
cent., having no positive value at all. In other words, it 
was 20 per cent, worse than nothing. 

In spite of these facts, however, Mr. Villard had the stock 
listed at the Stock Exchange, and through a carefully pre- 
pared report, showing immense and unprecedented earnings, 
he had the stock bulled up to 200. It was when it reached 
this high figure that the $9,000,000 of water (noted before) 
were thrown in to prevent it from becoming top-heavy. 

This was the preparatory and successful process of water- 
ing which preceded the transactions of Mr. Villard on a more 
magnificent scale in his manipulation of Northern Pacific, as 
described at the opening of this chapter. Mr. Villard ex- 
celled Mr. Seney in one respect which is noteworthy. As I 
have shown in a former chapter, Mr. Seney poured the wa- 
ter in lavishly at the reorganization, and prior to having his 
properties listed on the Stock Exchange. 

Villard improved upon this process by employing Seney's 



214 VIUyARD AND HIS SPECULATIONS. 

method liberally in the first instance, and also by a free and 
copious dilution after the stocks had been inflated to the 
very point of bursting. 

There is probably no instance in the whole history of 
railway manipulation in which a man has presented to the 
public, and with such amazing success, such a specious ap- 
pearance of possessing solid capital where so little existed 
in reality. 

He began with nothing in 1879 and succeeded in the course 
of a year in possessing himself, by various adroit methods, 
as described, 01 $3,500,000 of assets in railroad securities. 
With this as a basis of operation, in five years he managed 
to obtain temporary control of property aggregating in value 
over $1,000 000,000. 



CHAPTER XXIII. 

FERDINAND WARD. 

Peculiar Power and Methods of the Prince of Swind- 
lers.— How he Duped Astute Financiers and Busi- 
ness Men of all Sorts, and Secured the Support 
of Eminent Statesmen and Leading Bank Officers, 
whom he Bobbed of Millions of Money.— The most 
Artful Dodger of Modern Times. — The Truth of 
the Swindle Practiced upon General Grant and 
his Family. 

IN making a fair estimate of the part that Ferdinand Ward, 
of the firm of Grant & Ward, played in the panic of 
1884, I can only say that Ward's methods, taken altogether 
in their conception and execution, constituted a huge con- 
fidence game. He built up confidence by deceiving a few 
eminent men in financial and social circles, who, from his 
insinuating and plausible demeanor, were induced to place 
reliance upon his representations. 

His presence was magnetic, and his manner deceitfully 
unassuming. He had the art of dissembling in great per- 
fection and was possessed of extraordinarily persuasive 
powers, without appearing to have any selfish object in 
view. So highly developed in him were these social gifts, 
through the power of cultivation, that he could convince his 
unhappy victims that he was actuated with a single purpose 
for their welfare. 

By practicing in this way on the credulity of certain 
people, Ward managed to get into his hands, for his own per- 
sonal use, sums of money aggregating millions. Some of 
the richest financiers became his victims, chiefly induced by 
promises of high rates of interest and large profits on 
various ventures. 

Ward would ascertain the names and circumstances of cer- 



216 FERDINAND WARD. 

tain people who had large balances in their banks and were 
unable to make satisfactory and paying investments with 
them. He would bring certain influences to bear upon 
them to take their money out of the bank and invest it 
through him in " Government contracts," which he said 
afforded immense returns, but were of a delicate character, 
and required some secrecy in the manipulation. This cir- 
cumstance naturally prevented him from going into an ex- 
planation of the details of the enterprise, which it was not 
necessary for the investors to know when their profits were 
secured through such a stable investment. It was suffi- 
cient for them to be assured that the returns would be very 
large. 

As an instance of the successful manner in which Ward's 
specious pretences worked, I will relate the experience of 
one gentleman who deposited $50,000 with him, on the 
strength of these representations — just as an experiment. 

This gentleman was going on a trip to Europe and he left 
the amount stated in the possession of Mr. Ward to be used 
to the best possible advantage during his absence, and in- 
vested in his own way. 

About six months after the date of this deposit, the gen- 
tleman returned from Europe and called at the office of 
Grant & Ward to learn what progress had been made with 
his investment. He saw Ward, and called his attention to 
the fact. 

The young Napoleon of finance recollected the appear- 
ance of his customer at a glance, for he is admirably de- 
veloped in what phrenologists term individuality, and never 
forgets a face, but in the immense rush of his speculative 
business he had forgotten the circumstance until he referred 
to his books. He was but a few minutes absent in the in- 
terior office when he returned and informed the gentleman 
that his $50,000 had been invested with the ordinary turn of 
luck that usually accrued under his management, and he was 
very happy to be able to hand him a check for $250,000, 



ONE OF WARD'S BIGGEST SWINDLES. 21? 

after deducting the ordinary commission, as the result of 
the investment. 

The man was overpowered with this unexpected turn of 
luck, and the enormous profits taxed his credulity to its ut- 
most capacity. This was a speculative mine that he had 
never dreamed of, and instead of sleeping any that night he 
set his entire mind to calculate the profits on $250,000 in 
the same ratio that his $50,000 investment had been trans- 
formed into this amount. 

It required very little mathematical knowledge to arrive 
at the conclusion that with such another turn of speculative 
prosperity, he would, within the next six months, be a mil- 
lionaire and have the original investment left intact. Then 
if he should make this on three turns, which seemed not un- 
likely, when he should be present to look after his own 
business, he might pile up millions by the dozen. 

The mind of this fortunate speculator being filled with 
such thoughts as these, he lost no time after breakfast in 
taking the train on the elevated road and arrived at Ward's 
office before business had begun. When Ward arrived he 
met his customer with a gracious smile, took the check in 
the most handsome manner and made a note of it in his 
book. 

The investor had not very long to wait this time before 
he knew the result of his venture. It was only a few days 
prior to the 12th of May, 1884, at which date the failures of 
Grant & Ward and the Marine Bank were announced in 
Wall Street, as the avant courier of a sudden panic. So, the 
only thing that interfered with the second check producing 
similar results to those of the first, was the unfortunate 
panic, but of course Mr. Ward could tell his customer that 
he was not responsible for that. 

In this connection an important financial question 
arises. Would there have been any panic had it not been 
for Ward, Fish, Eno & Co. ? However this may be, there 
is one thing very evident, namely, that Mr. Ward must be 



218 FERDINAND WARD. 

accorded the power of ability to control men with, whom he 
came in contact in a remarkable manner, and of being 
able to get the best of them in all financial matters. Old 
and astute financiers, who were considered experts in every 
method of speculation, and who knew all the artifices of 
making a sharp bargain, became helpless in the mystical 
presence of Ward, and were completely non-plussed by his 
superior acumen in taking advantage of every situation that 
offered the least opportunity of practicing his peculiar 
methods of chicanery and fraud. 

Ward seems to have been very much of a mind reader. 
He knew when he passed that check over to the gentleman 
referred to, for $250,000, that it would come back again, that 
it would keep burning that man's pocket while he kept it 
there, and that sooner or later he was bound to return it to 
the mysterious place of its issue. Doubtless this was not 
the first case that Ward had experimented upon in this way. 
He had evidently made a regular practice of it, and could 
calculate the proportion of his victims with as much accur- 
acy as tables of mortality are made out for insurance com- 
panies. There was no blind chance about Ferdinand's 
methods. He worked according to a rule, having calculated 
to a nicety the exceptions that proved it, and his success 
showed that he had not wasted much time over stubborn 
cases. 

Ward displayed marvellous tact in discovering, at a glance, 
those who were sufficiently credulous to be entrapped into 
acquiescence with his schemes, and manifested great execu- 
tive ability in pouncing upon his prey at the proper moment. 
His methods of operation were admirably suited to his pur- 
poses. He saw, for instance, that this man would not put 
the money in any other kind of investment, and would not 
be likely to operate, except through Ward himself, as no 
other man could be found anywhere who could make him- 
self the instrument of realizing such stupendous returns for 
the money invested. 



ward's arts of persuasion. 219 

It is marvellous how the idea of large profits, when pre- 
sented to the mind in a plausible light, has the effect of 
stifling suspicion. 

The specious pretexts of Ward appeared equal to the task 
of overcoming the most obdurate cases of incredulity. So, 
it is not so singular, after all, that men utterly unacquainted 
with business methods and sharp practice in speculation, 
were so easily victimized by the sinister methods, concilia- 
tory manners and seductive schemes of this consummate im- 
poster. 

Ward was so successful in his arts of persuasion that he 
could not only succeed in getting possession of all the avail- 
able capital, for his own practical use, of many eminent 
financiers, but he had the power of transforming them into 
walking advertisements for the promotion of his nefarious 
designs, and turned them to the best account in drumming 
up business and customers for him while they were bliss- 
fully ignorant that they were all the time the subservient 
mediums of swindling projects. In fact, they made them- 
selves the willing instruments of u roping" in others for 
Ward's purposes, inspired by the purest motives of gratitude 
toward him as their confidential broker and benefactor. 

In this way General Grant and his sons became the help- 
less victims of Ward's deeply designing duplicity. 

People who have blamed General Grant fail to reflect on 
the fact that the famous soldier and able tactician was no 
better than a raw recruit in the hands of a disciplined war- 
rior when he was placed in contact with Ferdinand Ward's 
superior financial tactics. 

One great point in the confidence game worked on joint 
account between Fish and Ward was to obtain men of well 
known reputation to vouch for the genuiness of the enter- 
prises in which they were engaged. This enabled them to 
solidify and extend their credit. It was for this purpose that 
General Grant was inveigled into signing the well-known 
letter No. 2, addressed to Fish, which has been the subject 



220 FERDINAND WARD. 

of so much criticism and comment. Following is a copy 
of this letter : 

No. 2 Wall Street, \ 
Koom 6, j 

New York, July 6, 1882. 

My Dear Mr. Fish : — In relation to the matter of dis- 
counts, kindly made by you for account of Grant & Ward, 
I would say that I think the investments are safe, and I am 
willing that Mr. Ward should derive what profit he can for 
the firm that the use of my name and influence may bring. 

Yours very truly, 

U. S. Grant. 

This letter was written in answer to one from Jas. D. 
Fish, President of the Marine Bank, saying he had nego- 
tiated notes for the benefit of Grant & Ward, to the amount 
of $200,000. He said in explanation : " Those notes, as I 
understand it, are given for no other purpose than to raise 
money for the payment of grain, &c, to fill the Government 
contracts." 

This letter, signed by General Grant was designated by 
his counsel as " only an ordinary letter in the course of bus- 
iness," and that is all it is where a man placed confidence in 
another as General Grant did in Ward and Fish. 

It was Ward who wrote the letter, through the instruction 
of Fish, and got General Grant to sign it. 

In an interview with a reporter of the New York World, 
in July last, Ward explained the circumstances under which 
the letter was signed, as follows : 

"Do you know anything about that letter addressed to 
Mr. Fish and signed by Gen. Grant, regarding the Govern- 
ment contracts ?" asked the reporter. 

"Of course I do," quickly replied Ward. "I made the 
original draft. It was by Mr. Fish's direction, and he asked 
me to do it, suggesting what I should write. He had had 
some trouble in getting Grant & Ward's paper discounted, 
for he attended to that and raised millions of dollars. He 
wanted something to show to Mr. Cox, President of the 
Mechanic's Bank, and others from whom he tried to get 
money for the firm. The contract business was the great 



grant's memory unsulukd. 221 

thing, and he said if he only had something from the Gen- 
eral to show that he knew about the contracts, it would be 
easier for him to go to these men. I distinctly remember 
the circumstances under which this letter was prepared. 
Fish gave me an idea what it ought to be like and I wrote 
it. Then Mr. Fish went over it and made some corrections 
in his own handwriting. It was scrawled on a piece of 
paper that happened to be handy in the office, and after he 
had it to suit him he handed it to me and I gave it to Spen- 
cer, our cashier, to copy. I am not sure but that I have got 
that draft somewhere among my papers. I think I have 
seen it since the failure, and if it is still in existence it can 
plainly be seen that Mr. Fish knew all about it before it 
received Gen. Grant's signature. The General was in the 
habit of signing papers I asked him to without paying much 
attention to what they were. So when I asked him to sign 
this one he did so without much if any questioning. I un- 
derstood well enough what Fish wanted it for, because he 
told me, and I have no doubt that Mr. Cox and other gentle- 
men from whom he borrowed money saw the letter." 



CHAPTER XXIV. 

HENRY N. SMITH. 

How Mr. Smith Started in Life and became a Successful 
Operator. — His connection with the Tweed " King," 
and how he and the famous "boss" made lucky 
Speculations, through the use of the City Funds, in 
Making a Tight Money Market. — On the Yerge of 
Kuin in a Pool with W. K. Vanderbilt. —He is Con- 
verted to the Bear Side by Woerishoffer, and Again 
Makes Money, but by Persistence in his Bearish 
Policy Buins himself and Drags Wm. Heath & Co. 

DOWN ALSO. 

I HAVE already had occasion to speak of Henry N. 
Smith, who was a member of the firm of Smith, Gould 
& Martin, but I consider him of sufficient importance, 
speculatively speaking, for a separate biographical sketch. 

This gentleman is a native of Buffalo, and had been in 
the mercantile business there before coming to Wall Street. 
He was familiarly known as the young man from Buffalo. 
He had then a decidedly Hebrew aspect ; was a strawberry 
blonde, with full beard of auburn hue, sharp, piercing eyes, 
and an air of self-confidence. He had made some money in 
Buffalo, and was lucky in his first ventures in Wall Street, 
being one of the few who emerged from the panic of 1864 
on the winning side. Smith became a bold operator, and 
accumulated considerable money. He was invariably suc- 
cessful in his transactions whenever he was governed 
by his own judgment. The first disaster overtook him 
in the panic of 1873. Immediately prior to that he had 
been under the influence of Commodore Vanderbilt, who 
put him into Western Union, and the loss which he sus- 
tained by its terrible fall in that year almost ruined him. 
He lost all his ready money, being left without anything 
but his New York residence and a stock farm. 



224 HENRY N. SMITH. 

He did not lose courage, however, by this speculative bloW, 
but picked himself up again and soon became quite a power 
in the Street, and in spite of the ups and downs of specula- 
tion and the various panics, Smith kept clearly ahead of 
the market for many years, and became a successful and 
comparatively wealthy operator. 

He always managed to ingratiate himself with wealthy 
connections in his various operations, and was able to. com- 
mand an enormous amount of credit in comparison with his 
actual means. 

A few years ago, on his return from Europe, he met W. 
K. Vanderbilt, and they began to discuss the probable future 
of the market. Vanderbilt had been a bull for some time 
previously. They entered into an agreement to operate on 
the bull side together. The result was that Yanderbilt lost 
several millions, and came pretty near running the risk of 
exhausting a large part of his then anticipated share of his 
father's estate. The deal was disastrous to Smith also. 

Soon after this discomfiture, one day, on his way to Long 
Branch, Mr. Smith met the late Mr. Woerishoffer, who was 
the great bear on the market, while Smith and Vanderbilt 
were still then the leading bulls. Woerishoffer succeeded in 
convincing Smith that his position on the market was 
wrong — that he had better make a clean sweep of it in sell- 
ing out the stocks which he held, and join hands with him 
on the bear side. 

Smith was impressed with Woerishoffer's advice, earnest- 
ness and personality. 

The great bear was also in a position to back up 
his theory by examples of his success, the best and most 
convincing argument that could possibly be employed, 
especially by a Wall Street speculator. As the result of 
this bearish counsel, Smith soon recuperated from the effect 
of his former losses, and, in consequence, got bearish 
notions so badly on the brain that he was prepared to swear 
by Woerishoffer's judgment, and considered his own equally 



EFFECTS OF SPECULATIVE FANATICISM. 225 

infallible. He could see nothing but disaster ahead any 
more than his general, and was recklessly prepared to follow 
wherever the champion bear should lead in the destruction 
of values. 

Smith seemed to have the same abiding faith in Woer- 
ishoffer that Ignatius Loyola reposed in the Pope of his 
day. "If the Holy Father," said that eminent Jesuit, 
" should command me to row several leagues into the ocean 
in an open boat, in the midst of a terrific gale, I should 
straightway obey his mandate without asking why or 
wherefore." 

Such is hardly an exaggerated illustration of the thorough 
appreciation which Smith entertained of the perfection of 
Woerishoffer's bearish discipline, and the exact certitude of 
his judgment in all matters of a speculative character. It 
is almost impossible for a man who has had no experience 
in Wall Street matters to estimate the extremes of fanaticism 
in speculation to which a man is prepared to go when he is 
seized with a monomania either on the bull or the bear side, 
but especially on the latter. 

The evidence of his senses counts for nothing, and the 
evidence of other people's senses, if possible, goes for less. 
He is a consistent bull or bear, as the case may be, and that 
settles it. He is Sir Oracle on the stock market, and when 
he speaks let no dog bark. 

This inveterate combination of egotism and fanaticism 
has ruined many hundreds, to my own knowledge. The dis- 
ease is contagious, and Smith had a very obstinate form of 
it. His symptoms were even worse than those of Woeri- 
shoffer, by whom he was smitten, a peculiarity that very often 
occurs in the recipient of this financial malady. 

Like WoerishofTer, Smith fought the market with despera- 
tion on every advance. He adhered steadily to the policy 
of attacking prices on every rally during the summer of 
1885, while values were constantly advancing, with occasional 
healthy reactions. "When his own money was exhausted he 



228 HENRY N. SMITH. 

began to incur cumulative liabilities with the house of Wm. 
Heath & Co., until that famous firm had become almost de- 
pleted of its available resources in replacing margins as fast 
as they were wiped out by the persistent tide of advancing 
prices in speculation. 

Thus Mr. Smith proceeded, in obedience to the spirit of 
bearish fanaticism, until his loss became so great that he not 
only had to pay out all his own money, but was in debt to 
the firm of Wm. Heath & Co. in a million dollars, which 
was the cause of their failure, and which crippled or caused 
to collapse several smaller houses. 

When Mr. Smith appeared before the Governing Commit- 
tee of the Stock Exchange to make application for the exten- 
sion of time on his seat, he made the following extraordinary 
statement: "On January 1, 1885, 1 was worth $1,400,000. 
I had $1,100,000 in money, and the balance, $300,000, in 
good real estate. On the following January I had lost the 
whole amount, and was $1,200,000 in debt, a million of which 
I owed to Wm. Heath & Co." 

Many people were surprised that Mr. Smith was enabled 
to obtain such an enormous and unlimited amount of credit 
in one house. I took the ground at the time, and I am still 
of the same opinion, that the animal magnetism or psycho- 
logic power of Henry N. Smith over the elder Heath was 
the real cause of all the trouble. 

Mr. Heath had been in bad health for some time, conse- 
quently he left the general management of the business to 
Mr. McCanless, the head clerk and general manager of the 
firm, through whom the orders of Mr. Heath were strictly 
executed. 

Mr. Heath being weak in both body and mind, yielded his 
opinions to those of Mr. Smith, by virtue of the superior 
mental force of the latter. 

In conducting a large Wall Street business ft is necessary 
that a man should have the mental stamina to say "no" 
firmly, and stand to it. In order to be able to do this he 
must be backed up by a vigorous, healthy physique. 



BOSS TWEED AND THE MONEY MARKET. 227 

The power to utter a negative in a determined manner 
requires, generally, a fair degree of physical force, and it is 
absolutely necessary to the success of a Wall Street broker 
that he should be able to do it when occasion requires. A 
deficiency either in will power or physical force to pronounce 
this small negative distinctly and firmly may result in finan- 
cial ruin, as it did in the case of Wm. Heath & Co. 

Henry Nelson Smith made many successful turns in 
speculation during the Tweed regime, owing to the facilities 
which the municipal bankers belonging to that famous 
coterie afforded him for manipulating the money market. 

There were great fluctuations in stocks while William 
Marcy Tweed was the power behind the throne in the 
government of the city of New York. Mr. Tweed contribu- 
ted largely towards these fluctuations. He and his trusty 
companions pulled the wires at the City Hall while the 
puppets in several of the brokers' offices in the vicinity of 
Wall Street danced to the sweet will of the managers in the 
municipal building. 

One of Tweed's three famous maxims was, " The way to 
have power is to take it." The other two were, "He is 
human," and " What are you going to do about it F In con- 
formity with the first maxim, Mr. Tweed took control of the 
city funds, besides a number of the city savings banks, and 
other financial institutions, which he had organized through 
special charters from the Legislature, which he also owned 
during the period of his Boss-ship. 

These funds were so managed that a very tight squeeze 
could, at almost any time, be effected in the money market. 
The city funds on hand were, at that time, usually about 
from six to eight millions of dollars, and were deposited in 
the banking institutions of the "Boss." They were osten- 
sibly under the control of the City Chamberlain, who was 
under the control of Tweed. 

Henry N. Smith and a few other favorite members of the 
syndicate would draw their balances from these banks, 



228 HENRY N. SMITH. 

making money scarce to the general public, and the money 
market would suffer a sudden squeeze, and consequently the 
stock market would break, sometimes with such rapidity as 
to produce disastrous results to a number of brokers, busi- 
ness houses and other financial concerns outside the Tweed 
Eing. 

On one of these occasions Mr. Smith drove up to the 
Tenth National Bank, the Black Friday ring institution, 
in a cab, and drew his balance therefrom, amounting to 
$4,100,000. He took it home and kept it there several 
days under lock and key. In the meantime Mr. Tweed 
and his companions withdrew from circulation the greater 
portion of the amount under their immediate control, 
making a tie-up, on the whole, of nearly twenty millions 
of dollars. At that time this was an amount sufficient 
to make a very stringent money market, and cause Wall 
Street operators to feel very uncomfortable. It was then 
a mighty power to be wielded by a few unscrupulous 
men. At that time Mr. Smith considered himself worth at 
least five million dollars. He lost most of this in the panic 
of 1873, largely in Western Union stock, as above stated, 
into which Commodore Vanderbilt had kindly put him. 

I have referred to the prominent part which Mr. Smith 
played in the great speculative drama of Black Friday, in 
the scenes and incidents of my chapter on that ever-to-be- 
remembered day in Wall Street. 

I shall, in another chapter, briefly review some of the 
methods to which the Tweed Bing resorted to make specula- 
tion and politics play into each other's hands, and show 
how a bold attempt was made to add the control of the 
National Treasury to that of New York. 



CHAPTEE XXV. 

KEENE'S CAREER. 

He Starts in Speculation as a California Broker. — 
A Lucky Hit in a Mining Stock Puts Him on the Eoad 
to be a Millionaire. — His Speculative Encounter 
with the Bonanza Kings. — He Makes Four Millions, 
Starts for Europe and Stops at Wall Street, 
Where He Forms an Alliance With Gould, Who 
"Euchres" Him and Others. — Selover Drops Gould 
in an Area Way. — Keene Goes Alone and Adds Nine 
Millions More to His Fortune. — He Then Speculates 
Eecklessly in Everything.— Suffers a Sudden Ee- 
versal and Gets Swamped. — Overwhelming Disaster 
in a Bear Campaign, Led by Gould and Cammack, in 
Which Keene Loses Seven Millions. —His Desperate 
Attempts to Eecover a Part Entail Further Losses, 
and He Approaches the End of His Thirteen Mil- 
lions. — His Princely Liberality and Social Eela- 
tions with Sam Ward. 

ONE of the most remarkable up-and-down lives known to 
Wall Street is that of James E. Keene. His rise and 
fall are both of recent date. 

Mr. Keene is of English parentage, and was born in 
London, about 48 years ago. He came to this country at 
the age of 17, lived in the South and studied law there. He 
removed to San Francisco in 1853, aud became well informed 
in mining matters through several mining cases that were 
put into his hands while practising at the bar in that city. 
I am told he was also connected with a Western newspaper 
for some time. He caught the speculative fever shortly after 
his arrival in California, and, as it seems, abandoned both 
law and journalism to become a broker. 

Keene had hard work for some time to make both ends 
meet, and his struggle for existence in the wild West 



230 KEENE' S CAREER. 

made serious inroads on his health. His physician told 
him he must give up work, and advised him to take a long 
sea voyage if he intended to prolong his life. Acting on 
this advice, he secured his passage to the East. This was the 
turning point in both his health and fortune. 

Prior to his departure, Mr. Keene was urged to invest 
a few hundred dollars in a mining stock then selling 
very low. The length of his journey and the change of 
scene caused him almost to forget about his investment, and 
the methods of communication between the far West and 
the far East in those days were so very slow that he had 
hardly any chance of being informed of his lucky venture 
until his return. As an illustration of this slow transit of 
news at that time, it may be stated that gold was discovered 
January 19, 1848, but the news did not reach the Eastern 
States until the following December. lb was authoritatively 
announced in the President's annual message, and created 
great excitement. Mr. Alfred Eobinson, with about twenty 
companions, were the first to leave New York for the scene 
of the new El Dorado, on the bark " John Benton." 

After nearly a year's absence Keene was surprised to find, 
on his return, that mining stocks had taken a prodigious 
bound upward and carried the one in which he had invested 
with them. The mine had turned out to be a veritable 
bonanza, and the stock which had cost him only a few 
hundred dollars was then worth over $200,000. 

Had Mr. Keene's health not required his absence from 
the scene of speculation the chances are that he would have 
disposed of his stock as soon as it should have realized a 
few thousand dollars. 

This was a wonderful realization for one who had been 
comparatively poor, and was sufficient to turn the head of 
any ordinary man ; but it only made Keene more anxious 
for greater success, which he set himself diligently to 
achieve. 

The speculative craze was then intense and epidemic. 



HE NETS MIUJONS ON THE ''SHORT" SIDE. 231 

Waiters and chambermaids bloomed into millionaires with 
the rapidity of mushroom growth. Mr. Keene secured a 
seat in the Board, and began to do an immense business. 

Flood, Mackay, Fair and O'Brien were then the prominent 
operators. The speculative contagion spread rapidly over 
the coast, and soon imparted its influence to the entire con- 
tinent. Keene' s further investments were crowned with 
similar success to that of his first venture, and even in a 
greater ratio of profit. 

Seeing the great and rapid advance in the stocks of the 
Comstock mines, he naturally reasoned, like old Daniel 
Drew, that what had gone up so high and so fast was bound 
to come down. There were but few people on the coast at 
that time, however, in a mood to reason so soberly, and it 
required more than ordinary nerve to make the experiment 
of selling " short." Mr. Keene, however, had the courage 
of his convictions, and made an onslaught upon the market. 

There was a strong contingent to oppose him, for the 
wealthy syndicate just named, with the Bank of California 
behind them, were his bitter foes, and they did their best 
to crush him. In spite of their efforts, however, the market 
began to yield under the pressure of Keene' s " short " sales. 
In a little while the list gave way and stocks began to topple 
from their dizzy eminence, even quicker than they had 
climbed to that unprecedented height. Keene netted 
millions in their fall. He cleared two and a-half millions 
in the Belcher and Crown Point mines, and over half a 
million in Ophir. 

So, in a few years, this poor lawyer, journalist, curb- 
stone broker and invalid, found himself the happy possessor 
of millions, his name covered with speculative glory, and the 
fame of his fabulous fortune heralded in every city, town, 
hamlet and mining camp between the two oceans, 

Keene was still found on the right side of the market 
when the great bubble burst, when the Bank of California 
went under, and its president, Mr. Kalston, committed 



232 KEENE'S CAREER. 

suicide while pretending to take a bath in the Pacific 
Ocean. 

In 1877 Mr. Keene started on a voyage for Europe for the 
good of his health, and made a friendly call in Wall Street 
to see how business was transacted there. He found the 
speculative attraction irresistible. Mahomet had come to 
the mountain and was held by its magnetic power. 

Although Mr. Keene had been a grand success in Califor- 
nia, he had a good deal to learn when he came to Wall 
Street. He soon discovered that California tactics would 
not do here. He began to sell " short," but found the market 
failed to yield to the touch of his bearish wand as it had 
done in San Francisco. When he sold ten thousand shares 
of a certain stock the decline, instead of being a slump, as 
he expected, was only an insignificant fraction, and the 
market soon reacted. Mr. Keene quickly discovered that 
he was throwing water into a sieve, and stopped sacrificing 
his California gold so lavishly. 

A pool was then formed by Mr. Keene and Jay 
Gould to put down Western Union. Keene and Selover 
sold the stock in large blocks, but it was absorbed by some 
party or parties unknown as fast as it was thrown out. It 
was gravely suspected that Mr. Gould was the wicked part- 
ner who was playing this absorbing game behind the scenes. 
Major Selover brooded over the matter so seriously that his 
suspicions began to take tangible form and " body them- 
selves forth " in violence. 

The Major and Keene met one morning at the rear en* 
trance of the Stock Exchange, in New street, and inter- 
changed intelligent glances on the subject, after the fashion 
ol those passed between Bill Nye and his companion at the 
card table with the Heathen Chinee. Selover walked down 
the street with blood in his eye, and meeting Mr. Gould on 
the corner of New street and Exchange Place, caught 
him up by the collar of the coat and a part of his pants and 
dropped him in the area way of a barber's shop. 



HIS I.UCKY VENTURES IN NEW YORK. 233 

The little man promptly picked himself up, went quietly 
to his office, and made a transaction by which Selover lost 
$15,000 more. This was his method of retaliation. 

Mr. Keene next went into the Atlantic and Pacific Tele- 
graph pool, and was again fortunate. It has been frequently 
asserted that he lost heavily in this deal, but I have it on 
good authority that he came out ahead. In the deal with 
Gould in "Western Union, he and Gould netted on joint ac- 
count $1,300,000. It is popularly believed that Gould 
" euchred " Keene in this pool, but these are the bare facts. 

Keene looked over the speculative field, and found that 
there had been great depreciation in values prevailing 
here since the panic of 1873. He had arrived in the nick of 
time to take advantage of the situation. He was backed by 
four millions of money, and the few losses which he at first 
sustained were not felt by him, and only seemed to initiate 
him properly. 

This new blood was just what Wall Street then wanted 
to put the wheels of speculation in motion. Mr. Keene 
informed himself about the principal stocks dealt in at the 
Exchange. He did so with remarkable rapidity. They 
were all down to panic prices, and seeing that most of them 
were intrinsically cheap, he bought heavily. Soon the turn 
came which resulted in the high tide of speculation which 
continued with but slight reactions all through 1879-80. 

The advance was immense, as can be seen in the tabular 
statement at the end of this book, and the profits were enor- 
mous. 

Keene' s millions were doubled and trebled. He must have 
felt himself a modern Croesus. 

Fully nine millions were added to the four which he 
brought from California. He stood in the centre of that 
great pile, figurately speaking, the cynosuro of all eyes from 
Maine to California, and his fame was noised abroad in 
Europe. 

Gould and other old speculators began to grow green with 



234 KEENE'S CAREER. 

envy at Keene's unprecedented success. He seemed likely 
to exceed the wildest dreams that ever the avarice of Monte 
Cristo or Daniel Drew had conjured up, and with him 
the imaginary profits of Col. Sellers had become material 
realities. His investments were nearly all in good, reliable 
securities. No dubious paper acceptances nor rotten rail- 
road items were mixed up with his tangible fortune, 
which was without parallel in Wall Street for its size and 
rapidity of accumulation. 

The history of speculation was ransacked in vain for an 
illustration of such amazing success in so short a period. 
But here, I regret to say, this marvellous prosperity ends. 

In an evil hour Mr. Keene was induced to spread himself 
out all over creation, while he still retained his immense 
interest in stocks. He was so flushed with successive vic- 
tories that he began to regard failure impossible, and 
thought he was a man* of destiny in speculation, such as 
Napoleon considered himself in war. He speculated in 
everything that came along — in wheat, lard, opium and fast 
horses. 

Keene's attempt to get a corner in all the grain in the 
country, however, was a signal failure. The very week that 
Foxhall won the Grand Prix in Paris he himself was sadly 
beaten in the speculative race by the steady going farmers 
of the West, who sent their wheat to market quicker than he 
could purchase it with his thirteen million dollars, and all 
the credit which that implied. 

All of a sudden, reversal in the tide of speculation set in. 
Mr. Cammack was quick to perceive that Mr. Keene was ex- 
tending his lines and his ventures. He had a conversation 
with Mr. Gould. They became convinced that the Calif orn- 
ian must soon be obliged to leave some of his enterprises in 
a weak and unguarded position. It was impossible that he 
could take care of them all. These two champion bears 
united their efforts to upset the market, and each day 
brought additional force to their aid. By dint of persever- 



CAUSES OF HIS SUDDEN COI,I<APSE. 235 

ance their efforts commenced to bear fruit, and it was ap- 
parent that they would soon be rewarded with success. The 
bears began to multiply while the bulls diminished, and the 
remnant of the latter that were left were anything but ram- 
pant at that time. 

The bankers became timid. The brokers were inspired with 
the same spirit and were still calling out for more margin. 
Loans were called in as a part of the programme of a bear 
campaign, and all the machinery of depressson was pat in 
active motion. Prices were torn to pieces. Properties that 
had been considered good as solid investments for a long 
turn, were mercilessly raided, and some of them shattered 
to fragments. In fact, there was a regular panic. In the 
general slaughter, many of the brokers sold Mr. Keene's 
stocks out. His wheat was also sold in immense quantities 
at great sacrifice, and his load was lightened all around, even 
more quickly than it had been heaped up. 

His losses are said to have amounted to seven millions of 
dollars at this time. 

The manly efforts of Mr. Keene to recover these losses, 
as is usually the case in such instances, only resulted 
in further misfortune. Disaster followed disaster, and as 
he became desperate in his efforts to get back something, 
his losses became constantly greater, until nearly the whole 
of his immense pile was buried in fruitless efforts to recover 
a portion of it. 

Great sympathy has been felt in Wall Street for Keene 
since his failure, for the Street had never before found such 
a liberal man. By general consent he decidedly took the 
palm in this respect, not only from all his speculative con- 
temporaries, but the archives of Wall Street since the days 
of the first meetings of the brokers in the Tontine Coffee 
House, opposite the sycamore tree, early in the century, can 
furnish no such parallel of princely liberality as that of 
James R. Keene during the period of his matchless pros- 
perity. 



236 KEENE'S CAREER. 

The parasites that waxed fat on his bounty and business 
are numerous. At least a score of Wall Street brokers were 
raised from penury to wealth by the commissions which they 
made out of him. Many of them are to-day living in luxury 
who started with a desk and a few plain office chairs to do 
business for the California millionaire, and now he is com- 
paratively poor, and thrown on the slender resources of his 
wife. 

Keene arose from nil to be worth thirteen millions. He 
is now back where he started, 

A full and correct history of Keene' s beneficences would 
fill this volume, and however much I admire him, I cannot 
afford to give him so much space. 

I shall relate one remarkable instance of his unbounded 
generosity, however, as the object has been so universally 
known, and was himself such a popular society man. 

Long prior to Mr. Keene's advent in Wall Street, Sam 
Ward had been a conspicuous figure in Washington and 
Wall Street, and had acquired a society reputation in 
Europe. 

This gentleman was originally forced into prominence by 
his marriage with Miss Astor. 

Mr. Ward had changed from one thing to another until 
finally he took up his abode in Washington, and became a 
lobbyist. 

When Mr. Keene came to New York with his four mil- 
lions of dollars, which he had made when the majority of 
New York investors had been on the losing side, dropping 
their money almost as fast as water runs down hill, through 
the unprecedented shrinkage in values, there was a wide 
field for profitable investment. This shrinkage had been 
going on from the panic of 1873, step by step downward 
until 1878, when society had reached a stratum by dint of 
levelling down that placed almost everybody upon an 
equality. Property, in many instances, became a serious 
encumbrance instead of a benefit, and many were glad to be 



SAM WARD'S DKKP ATTACHMENT. 237 

rid of the responsibility of their holdings for what was suffi- 
cient to settle the mortgage. Everybody felt poor, and was 
really so, with a few fortunate exceptions. 

Mr. Keene arrived here at the most fortunate moment for 
investment. Everything was down to bed-rock prices. He, 
therefore, became an object of actual curiosity, and. was as 
much of a lion in our midst as he had been in San Francisco. 

He was not only the favorite of fortune, but a favorite of 
society, which generally go together with curious inconsist- 
ency in our social democracy. 

One of the first acquaintances Mr. Keene made on his 
arrival was this great society man, the celebrated Sam 
Ward, who at once recognized his social worth, not only in 
dollars and cents, but in considerable liabilities, genuine 
representatives of dollars and cents. The more tangibly he 
realized this fact the more tenacious was his attachment, 
until Mr. Keene found Mr. Ward the very beau ideal of 
Scriptural fraternity, namely, " a friend that sticketh closer 
than a brother." 

Wherever Keene appeared, though apparently alone, it 
was safe to bet that Ward's shadow could soon be seen. 

It is said of Seneca, when he observed a house falling, 
and nobody near it, that he asked : " Where is the woman ? " 
So Keene' s presence naturally suggested Ward to the mental 
vision of every Wall Street man and every sporting man. 

Whether it was up-town or down-town, at Newport, or in 
London, at the Derby, or the Grand Prix, it was all the 
same, where Keene was, there Ward soon appeared with the 
promptitude of the genius that stood before Aladdin when he 
touched his wonderful lamp or rubbed his magic ring. 

This self-sacrificing friendship and ardent devotion on 
the part of Mr. Ward was recognized by Mr. Keene in the 
most tangible manner. He made an investment for his pro- 
tege, of $50,000 in solid securities, placing them in the hands 
of trustees, so that his ward received the income therefrom 
of three thousand dollars, as an annuity, for life. 



238 KEENB'S CAREER. 

Mr. Keene bestowed numerous benefits on other newly 
made acquaintances, of which this is a fair sample. 

A Pacific coast biographer draws the following graphic 
sketch of Keene, some time after his departure from Cali- 
fornia, which is curious reading in the light of the events 
which I have related : 

"No series of sketches of men, prominently identified with 
the stock interests of the Pacific coast, would be complete 
without a pen portrait of James E. Keene, the free lance 
operator of the San Francisco stock market, who dared to 
beard the Bonanza Kings in their den, and came off victor- 
ious with many shekels of gold and silver. Mr. Keene is 
no longer with us. Some time since, after having realized 
largely on his stock ventures, he concluded to take a trip 
East, to be extended to Europe, unless on the Atlantic sea- 
shore he regained the health which too active exertions on 
the Pacific had impaired. And so he went with his family. 
Those who bade him God-speed expected to see him return 
within a few months, certainly within a year, with recovered 
health, new ambitions, new conquests to make. But he 
comes not. New York has presented more attractions than 
his old love, San Francisco. Kailroad stocks, Jay Gould, 
Sam Ward, Eufus Hatch, Long Branch, Trenor W. Park,, 
Newport, havo been too many attractions for Jim Keene. 
He fell into the New York market as easily as any man 
generally falls among thieves — but he seems to have got the 
best of the thieves in every issue. When it was rumored 
that Keene contemplated making Wall Street his head- 
quarters, his old San Francisco friends generally wrote out 
their calendars, and figured up when ' Jim ' would be back, 
bursted out and out, looking for a job. A few who had 
abiding faith in Keene, who knew his pluck, who had gauged 
his capacities, who had measured his horse sense, consulted 
their calendars and said : • Jim is gone ! He never will come 
back to couch his lance in such a narrow field as ours. New 
York is big, Wall Street is big — just about the size of insti 
tutions that Keene wants to tackle.' The few were right. 
Keene hasn't come back to look for a job. He has tried 
conclusions with the smartest of the Wall Street operators, 
and, novice that he was, came out triumphant. The Cali- 
fornia goose that was to be plucked wasn't plucked. Even 
Jay Gould, with all his shrewdness, gave it up as a bad job ; 



MIGHT HAVE MADE TEN MIUJONS. 239 

and Vanderbilt condescends to confer with Keene on mo- 
mentous occasions. 

"Keene started in his career as a stock operator years ago 
in San Francisco. He first was conspicuous as an impulsive, 
dare-devil sort of a street broker, acting for big firms, with 
an occasional dash for liberty and himself. Gradually he 
worked his way from steerage to cabin, from the private's 
ranks to the position of the lieutenant of the watch, then to 
officer of the day, and finally, boss of the stock concern. No 
man in the stock market exercised so much influence as Mr. 
Keene. He had hosts of friends, friends whom he grappled 
with hooks of steel, ready to swear by him on any and every 
occasion. Generous to a fault, brusque in manner at times, 
but with the heart of a woman, ready to melt at a moment's 
notice, open-handed and open-hearted to the appeal of even 
an acquaintance, no wonder that Jim Keene was the ideal 
of the market." 

It is not generally known that Keene was chiefly instru- 
mental in rehabilitating the Bank of California after the 
death of Ealston. He raised a large subscription in the 
Stock Board, and got the Hon. William Sharon, D. O. Mills 
and " Lucky " Baldwin to subscribe a million each, and he 
put in a million himself. The bank was thus enabled to meet 
all immediate demands, and a threatened panic was averted. 

At the time of Keene's failure he was chief of a syndicate 
which had purchased 25,000,000 bushels of wheat, which 
would soon have netted many million dollars of profit, if it 
had been firmly held, but one or two of his partners in the 
pool became timid and sold out. The syndicate went to 
pieces, and both profits and capital vanished. He laid his 
misfortune mainly to the newspapers which raised such a 
universal cry about the immense " corner " that was being 
manipulated in wheat, threatening a famine in the great sta- 
ple of human life. 

Keene was next shaken out of his stocks. This was done 
chiefly by an ably concocted scheme of the bears, and he 
had the mortification of seeing the stocks which he had 
held advance within a few months' time to a point that 
would have enabled him to realize ten million dollars, if he 
had been able to hold them. 



CHAPTER XXVI. 

OUR RAILROAD METHODS. 

Deceptive Financiering. — Over-Capitalization.— Stock 
* Watering." — Financial Reconstructions. — Losses 
to the Public. — Profits of Constructors. — Bad Repu- 
tation of our Railroad Securities. — Unjust and 
Dangerous Distribution of the Public Wealth. 

THE following chapter, on the subject of " Our Railroad 
Methods " was delivered by me as a Fourth of July ad- 
dress at Mr. H. C. Bowen's Annual Symposium atWoodstock, 
Conn., to an assemblage of over 3,000 people. It was so 
favorably received by the press and the public in general, 
that I have been encouraged to publish it in this book with- 
out any material changes : 

" In the whole range of our law-making there is no one 
branch in which there has been such an utter lack of judg- 
ment, foresight and just regard for the rights of the citizen, 
as in the legislation provided for our railroads and railroad 
companies. For the most part, the statutes relating to this 
class of corporations are a set of general enactments, loose- 
ly denning the large powers granted to the incorporators, 
comparatively silent on the duties and obligations of the 
companies to the public, and conferring upon them a virtual 
carte blanche as to their methods of finance and of conduct- 
ing their business. 

In a country whose products are mainly bulky, and have 
to be carried to markets hundreds or thousands of miles 
distant, it is of the first moment that its railroads should be 
built with the strictest economy and on the lowest possible 
capitalization. The low cost of land and the cheapness ox 
material for road-bed are especially favorable to our secur- 
ing this advantage ; but the laws have permitted a system 
of inflated financiering which neutralizes these natural adap- 
tations and immensely increases the cost of transportation. 

As railroads have to be largely built with borrowed 



242 OUR RAILROAD METHODS. 

money, their construction in this country afforded an oppor- 
tunity for establishing credit relations with the great lend- 
ing centres of Europe, which might have been of incalculable 
value in promoting the development of our vast resources in 
various directions. England, Holland and Germany have 
indeed loaned us very large amounts for railroad enter- 
prises ; but the law has permitted these undertakings to be 
conducted with so much concealment, misrepresentation 
and actual fraud, and has so disregarded the rights of the 
bondholders, that American credit has become a scandal 
and a by-word on the European bourses. The result is, that 
foreign capitalists are seeking other fields of investment ; 
and their respective Governments are encouraging them by 
opening up new colonies, and thus getting fresh sources for 
the supply of products which otherwise would have con- 
tinued to be readily taken from the United States. Such 
are the rewards of immoral financiering ; and these bad meth- 
ods are directly traceable to the encouragements afforded 
by our negligently constructed railroad laws. 

Perhaps I may best succeed in making myself understood 
on this subject by illustrating the way in which our railroads 
are usually built. Under the laws of the State of New York 
— which are a fair sample of the laws of most other States — 
a number of persons form a company under the general rail- 
road laws, registering at Albany the proposed route of the 
road, the amount of capital stock and bonds to be issued, 
and a few other particulars required in the papers of incor- 
poration. The incorporators then proceed to form them- 
selves into a syndicate or company, for the purpose of 
contracting to build and equip the road. Here comes the 
first step in the system of " crooked " financiering. In their 
capacity of incorporators, the same men make a contract 
with themselves, in the capacity of constructors. Of course, 
they do not fail to make a bargain to suit their own interests. 
They would be more than human if they did. Usual- 
ly, the bargain is that the construction company undertakes 



COVERING COST WITH FIRST MORTGAGE. 243 

to build the road for 80 to 100 per cent, of the face value of 
the first mortgage bonds, with an equal amount of stock, 
and sometimes also a certain amount of second mort- 
gages thrown in, virtually without consideration. The first 
mortgages are supposed to represent the real cash outlay 
on the construction and equipment; but, as a matter of 
fact, the true cash cost of the work done and materials 
furnished ranges from 60 to 80 per cent, of the amount 
of first lien transferred to the constructors. The Construc- 
tion Company disposes of the bonds, partly by negotiat- 
ing their sale to the public through bankers, at an advance 
upon the valuation at which they had received them, and 
partly by using them in payment for rails and equipment. 
Beyond the profits made from building the road for the 
first mortgage bonds, there remains in the hands of the 
constructors the entire capital stock and any second mort- 
gage bonds they may have received, as a clear bonus, to be 
held for future appreciation, and to keep control of the 
Company and be ultimately sold on a market deftly man- 
ipulated for that purpose. 

This is the way in which a large majority of our railroads 
have been and others are still constructed. It will thus be 
seen that the actual cash cost of a railroad is ordinarily less 
than 50 per cent, of the stock and bonds issued against the 
property, and that its first mortgage exceeds the amount 
of the legitimate actual cost of the road. 

The basis of all the discredit, the embarrassments, the 
bankruptcies and the robberies of our railroad system is 
thus laid at the inception of the enterprises. They rest 
upon an intrinsically rotten and dishonest foundation ; and 
the evil is far from having reached the end of its mischief 
to the financial, political and social interests of the coun- 
try. In some few cases, railroads thus exorbitantly capi- 
talized have proved able to earn the interest on their debt, 
provide for additional outlays on construction and better- 
ments, and even to pay dividends on their stock ; but, in 



S444 OUR RAILROAD METHODS. 

a large majority of cases, they have had to undergo a pro- 
cess of financial reconstruction, in order to bring the debts 
of the Company within its ability to meet its fixed charges. 
It is not a risky estimate to suppose that of our present 
125,000 miles of railroad, with its $7,500,000,000 of stock 
and debts, 60 per cent, has undergone this process of debt- 
scaling and rehabilitation. Were it not that the new roads 
have opened up new country for settlement, which has be- 
come an immediate source of traffic, these bad financial 
results would have been more general and worse than they 
have proved to be. The risks attending the building of 
lines into unsettled regions ought to have been a reason 
why they should be constructed upon conservative princi- 
ples ; but, in reality, the prospects of settling new popula- 
tions and of tapping new sources of wealth, have been so 
magnified to the eyes of distant and credulous lenders as 
to enable the speculative constructors to easily consummate 
their illegitimate schemes. 

The general result of this system of financiering has been 
to deprive the legitimate original investors of their chances 
of making a fair return out of their investment. As a rule, 
the bondholders have provided all the capital expended, 
and the stockholders have invested nothing. The bond- 
holders incur all the risks ; the stockholders have no re- 
sponsibilities. If the enterprise proves a success, the 
bondholders get their interest, while the stockholders, 
without a dollar of original outlay, get vastly more than 
ever falls to the mortgage creditors through the stock be- 
coming an instrument of profitable speculation. If the 
enterprise is a failure, the bondholder has to forego inter- 
est and finally to accept a new mortgage for a less amount 
and at a lower rate of interest ; whilst the original stock- 
holder has, in the meantime, made money out of artificially 
"booming" the shares in Wall Street. 

The profits realized on these speculative constructions 
are enormous, and have constituted the chief sourco of the 



FIFTY PER CENT. IN EXCESS OF COST. 245 

phenomenal fortunes piled rip by our railroad millionaires 
within the last twenty years. It is no exaggeration to 
characterize these transactions as direct frauds upon the 
public. They may not be such in a sense recognized by 
the law, for legislation has strangely neglected to provide 
against their perpetration ; but, morally, they are nothing 
less, for they are essentially deceptive and unjust, and in- 
volve an oppressive taxation of the public at large for the 
benefit of a few individuals, who have given no equivalent 
for what they get. The result of this system is that, on an 
average, the railroads of the country are capitalized at prob- 
ably fully 50 per cent, in excess of their actual cost. The 
managers of the roads claim the right to earn dividends upon 
this fictitious capital, and it is their constant effort to 
accomplish that object. So far as they succeed, they exercise 
an utterly unjust taxation upon the public, by exacting a com- 
pensation in excess of a fair return upon the capital actually 
invested. This unjust exaction amounts to a direct charge 
and burthen on the trade of the country, which limits the 
ability of the American producer and merchant to compete 
with those of foreign nations, and checks the development 
of our vast natural resources. In a country of "magnificent 
distances," like ours, the cost of transportation is one of 
the foremost factors affecting its capacity for progress ; and 
the artificial enhancement of freight and passenger rates 
due to this false capitalization has been a far more serious 
bar to our material development than public opinion has yet 
realized. The hundreds of millions of wealth so suddenly 
accumulated by our railroad monarchs is the measure of 
this iniquitous taxation, this perverted distribution of wealth. 
This creation of a powerful aristocracy of wealth, which 
originated in a diseased system of finance, must ultimately 
become a source of very serious social and political dis- 
order. The descendants of the mushroom millionaires of 
the present generation will consolidate into a broad and 
almost omnipotent money power, whose sympathies and in- 



246 OUR RAILROAD METHODS. 

fluence will conflict with our political institutions at every 
point of contact. They will exercise a vast control over 
the larger organizations and movements of capital; monop- 
olies will seek protection under their wing ; and, by the 
ascendancy which wealth always confers, they will steadily 
broaden their grasp upon the legislation, the banking and 
the commerce of the nation. 

The illegitimate methods by which the wealth of this 
class has been accumulated cannot always remain a mystery 
to the masses. The time will come when every citizen will 
clearly perceive how his interests have been sacrificed for 
the creation of this abnormal class ; and, when that time 
comes, a series of public questions will arise that will strain 
our political institutions to their very foundations. Already 
the working masses begin to see the dim outline of the 
gigantic wrong that has been inflicted upon them in com- 
mon with all other classes. If they do not understand the 
exact method by which a portion of the rewards of labor 
has thus been diverted from them, they clearly comprehend 
which is the class responsible. The labor troubles that 
have so seriously shaken confidence during the spring of 
this year have been largely stimulated by an idea that a 
serious wrong has been done to the workman in the creation 
of these abnormal fortunes. It is not surprising— although 
it may lead to disappointing results — if workingmen should 
reason that, if railroads can afford to make a few men so 
wonderfully rich, they can afford to pay their employes 
higher wages and for shorter hours. Nor can we wonder if, 
when capitalists are on every hand piling up their wealth 
by the tens of millions, the laborer should conclude that he 
ought to be able to get a few dollars a week more, or deduct 
an hour or two off his day's work, without very seriously hurt- 
ing the employing class. This may be and is very fallacious 
reasoning ; but it is what might very naturally be expected 
under these circumstances, from a class who are not trained 
to think beyond surface depth. It will be of no avail to 



IMMENSE FORTUNES OF RAII/ROAD MAGNATES. 247 

tell the workmen that this unjust distribution of wealth is 
final and irrevocable ; that there is no power of redress by 
which a wrong of this nature can be righted ; or that, as 
voting citizens, they are as much responsible as anybody 
else for permitting the neglects and defects of legislation 
that have made these inequalities possible. This class 
never reason either calmly or logically, and it will take a 
great deal of fruitless agitation to satisfy them of the hope- 
lessness of their methods of seeking reparation. 

The Socialistic seductions which have captivated such 
large masses of the working population of Europe will all 
the more readily find acceptance among our millions of 
laborers because they have before their eyes such conspic- 
uous instances of the unequal division of wealth and of the 
overwhelming power of organized capital. Certainly, if any 
facts could be supposed to justify the doctrines of Socialism 
and Communism, it would be the sudden creation of such 
fortunes as those which, within a very few years, have come 
into the hands of our railroad magnates. A few years later, 
the public will understand much better than it now does 
how facts like these have contributed to the raising of ques- 
tions of government which will dangerously test the cohe- 
sion and endurance of our political institutions. 

Artificial methods of establishing our railroad corpora- 
tions have naturally led to artificial methods of regulating 
their operations. Over- capitalization incapacitates the roads 
for competition ; for it necessarily holds out a temptation to 
parallel existing roads by others at a lower capitalization. 
As roads running between the same points were multiplied, 
competition for " through " business became more active, 
until not only were dividends threatened on some of the best 
lines, but some roads were driven into default on their mort- 
gages. At this point the "pool" was introduced — a device 
by which all lines running between the same points agree to 
put their business from through traffic into a common ag- 
gregate, to be distributed among the several members accord- 



248 OUR RAILROAD METHODS. 

ing to certain accepted percentages. It was hoped that, in 
this way, uniformity of charges could be maintained, at 
such rates as were necessary to make the business satisfac- 
tory to each member. This, however, was soon found to be 
a step " from the mud into the mire." The pool was dis- 
covered to operate as a premium on the construction of new 
parallels. 

Speculators were quick to perceive that they could build 
new lines on the same routes for much less cost than the old 
ones, and that, with a lower capitalization, they could easily 
compel the pool to admit them to membership, with all the 
privileges of a ready-made traffic and with all the guaran- 
tees the pool could afford of exemption from competition, 
and of ample charges. Thus, the pools that, in the first 
instance, were made necessary through the evils of specula- 
tive methods of construction, became, in turn, the source of 
a new and even worse form of the same evil. New roads 
were built, or sets of old detached ones were connected, so 
as to afford additional parallels to the existing trunk lines, 
with no other object than to compel the latter to support 
them by dividing with them a portion of their traffic, or to 
accept the alternative of a reckless cutting down of rates. 
The end to this viciously excessive system of construction 
can only come when the pools have been reduced to such a 
low condition that they will no longer care to take new- 
comers into their co-partnership ; in which case speculative 
builders will see no chance for profit in such ventures. The 
fate of the " Nickel Plate" and of the West Shore specula- 
tions, by which nearly 1,000 miles of needless road was 
built to divide traffic with the Vanderbilt system, serves as 
a warning against the danger of building roads to live upon 
pool support ; but, nevertheless, the Eastern trunk pool still 
stands exposed to a great deal of harassing outside compe- 
tition from possible and contemplated new combinations of 
existing detached links. Eoutes of the latter kind are even 
more formidable competitors than new lines, because they 



THE "POOI," SYSTEM A FAILURE. 249 

can be provided at a lower capitalization, and have already 
the support of an established way traffic. It would not be 
surprising if, within the next three or four years, several new 
routes should in this way be established between New York 
and Chicago. 

It will thus be seen that the very contrivance intended to 
stave off the vicious effects of artificial capitalization is 
contributing, by a sort of punitive process, towards the end 
of reducing earnings to a just ratio to the true value of the 
properties. The weakness of the pool, arising from its 
temptations to new competitors to enter the field, is not the 
only cause of its failure. Up to this time it has been found 
impossible to find a form of pool stringent enough to restrain 
the members from cutting rates against each other. The 
modes of possible evasion are so numerous, the sacrifices of 
special advantages that each member has to make are so 
galling, the small share that remains to each road in a 
numerously divided business is so small, and the tempta- 
tions of agents to get freight " by hook or by crook," in dull 
times are so irresistible, that the strictest watching and the 
severest penalties fail to secure a faithful observance of the 
pool agreements. Much forbearance is shown towards 
transgressions, and deliberate violations have to be condoned 
or connived at ; but, all the time, the pools are in imminent 
danger of jealousies and breaches of faith causing their dis- 
ruption. No sooner have they won public confidence by 
maintaining harmony through a period of prosperous busi- 
ness, than the public wake up to find that some member has 
been secretly "cutting," and the agreements are torn to 
pieces. 

The result is, that the public have lost all confidence in 
the ability of the pool to regulate competition ; and, still 
worse for the railroads, their managers are losing faith in 
them also. The great crucial test of this expedient, so 
far as respects the Eastern lines, is likely to come when the 
number of smaller outside competitors, of the character 



250 OUR. RAILROAD METHODS. 

just alluded to, comes to be increased. The pool will not 
be likely to admit them into its fold, which already includes 
too many diverse interests to permit of harmony ; and if it 
did, the danger of disagreements and disruption would be 
only thereby increased. And yet, if those routes are shut 
out, they will act as so many free lances, attacking the older 
lines in every direction, and doing business at rates which 
will leave the pool companies no alternative but to follow 
suit. In this dilemma, the outlook for some time ahead 
is not an encouraging one for the older companies. To 
my view, it seems very probable that their original sins 
of construction and their subsequent transgressions of stock 
'* watering" are about to find them out. The natural law of 
competition is a terrible foe to the violators of commercial 
justice. It is the inevitable police power of trade. Its 
working may be evaded for a time ; its final conquest over 
wrongs and monopolies may sometimes be delayed beyond 
the limits of human patience, and men may at such times 
lose confidence in its power to right the wrongs of society ; 
but its ultmate success in the restoration of equity and fair- 
play is as certain as the rising of the sun. 

^Lj absolute confidence in the ultimate triumph of this 
principle prompts me to venture the assertion that, at no 
very distant period, the wrongs practised in the original con- 
struction of our railroads and in the subsequent " water- 
ings r of their stocks, will be compensated through compe- 
tition adjusting the profits of the companies to the equivalent 
of a fair return upon a true valuation of the properties ; that 
is, a value measured by what they are able to earn under the 
conditions of free competition and the now current cash 
cost of providing like facilities. That, it appears to me, is 
the solution towards which our railroad problem is now 
steadily working; and neither Congressional legislation, 
nor State regulation, nor the resistance of organized capital, 
can be expected much longer to stave off that result. 

It may, howeve^be very properly asked, whether legisla- 



LKGISLATIVK RESTRICTION REQUIRED. 251 

tion has no duty in the premises ? To me, it appears that 
it has a very weighty one. The consequences of the origi- 
nal neglect to prescribe proper regulations for the construc- 
tion, capitalization and financial management of railroads 
has been so fully exposed by their past history, that the 
Legislatures will greatly err if they neglect to impose re- 
restrictions upon future corporations that will prevent 
further repetition or perpetuation of the evils. When the 
Government bestows upon railroads important privileges 
and franchises, under which fundamental private rights 
are held in ab ey ance for the common good, it is due to the 
public protection that the recipients of these favors should 
be held under restrictions which will prevent them from 
abusing the privilege to the public disadvantage. 

When a railroad company capitalizes its property at 
double its actual cost, and seeks to collect charges calculated 
to yield dividends upon such false capital, it grossly per- 
verts and abuses the privileges conferred by its charter, and 
virtually perpetrates a public robbery. This appears to be 
a perfectly plain proposition, and yet this glaring wrong 
has been so long tolerated that not only the railroads, but a 
portion of the public even, have come to regard it as a sori 
of right inherent in these corporations. One of the first 
duties of the State Legislatures, therefore, is to enact laws 
requiring that the stocks and bonds issued against any rail- 
road hereafter built shall, in no case, exceed in the aggre- 
gate the true cash cost of the property ; the penalty for the 
violation of this restriction to be forfeiture of charter. The 
responsibility of managers should be definitely fixed. All 
extensions, betterments or improvements should be provided 
for by issues of stock or bonds on like conditions. The 
issue of mortgages should be restricted within 60 per cent, 
of the true cost of the property. 

In order to prevent wrongful speculative profits being 
realized by the incorporators, they should be prevented 
from becoming the constructors of their road, directly or in- 
directly ; and all contracts for construction, equipment, ex- 



252 OUR RAILROAD METHODS. 

tensions or improvements should be made upon open com- 
petitive bids, the lowest bid to be accepted, with substantial 
guarantees for the faithful performance of the contract,. 
Also, it should be made the duty of a board of State rail- 
road commissioners to see to it that all these conditions are 
strictly complied with. ^Regulations should be provided 
prohibiting issues of stock for any other than construction 
or equipment purposes, forbidding the payment of dividends 
not actually earned, and enforcing the amplest publicity of 
details relating to current traffic and the financial affairs of 
the companies. 

Had our original railroad laws incorporated provisions of 
this character, our railroads would have all along ranked as 
the safest and most stable investments of the country ; the 
discredit that hangs over our corporate enterprises would 
have been averted ; transportation would have been done at 
lower rates with steadier charges, and we should have been 
saved the social and political excrescence of an aristocracy 
based upon ill-gotten wealth. After our bitter experience of 
the dangerous results of neglecting to guard the railroad in- 
terest by some such restraints as the foregoing, it surely is 
not too early now to apply these safer methods to all future 
enterprises of this character. Not only is such legislation 
due as a measure necessary for the protection of our com- 
merce and investors, but it would go very far towards 
remedying the evils that have grown up under the old and 
badly regulated system. To a man of business it is hardly 
necessary to point out what would be the competitive ad- 
vantages of roads constructed under the proposed regula- 
tions. As a rule, their capitalization would not exceed 50 
to 60 per cent, of that of the older companies, and they 
could, therefore, be run upon a much lower rate of charges. 

The thoroughly conservative nature of their organization 
would bespeak for them a degree of public confidence which 
would enable them to get all the capital needed for really 
legitimate undertakings, whilst purely speculative ventures 
would be put under conservative check. Under these cir- 



DISASTROUS RESUI/TS OF COMPETITION. 253 

cumstances new roads could do a profitable business, and 
jet compete disastrously with the old excessively capital- 
ized companies. The ultimate result of this competition 
from the new order of roads would inevitably be to reduce 
the earnings of the older class to a point which would admit 
of interest and dividends being earned only on the same rate 
of capitalization as existed among the new-system companies. In 
other words, the effect of the honest method of capitalization 
here suggested would be to squeeze all the " water" out of 
the old companies, and to bring them in effect, though pos- 
sibly not in form, to the same financial level as the new. 

If my reasoning here is correct, there is cause for our 
great railroad capitalists to look out for the security of their 
investments. The basis for their wealth may prove far less 
certain than they have imagined it to be. With the prevail- 
ing and steadily increasing public feeling against the 
methods of railroad capitalists and the working of our rail- 
road system, what assurance can there be that, when a rem- 
edy for these corporate wrongs comes to be clearly pro- 
pounded, it will not be eagerly urged upon the attention of 
the Legislatures and adopted without much ceremony ? The 
dash of a Governor's pen is, therefore, all that stands be- 
between the railroad millionaire and the sudden extinction 
of a large portion of his inflated paper wealth. Is this a 
chimerical conclusion ? The question, it seems to me, de- 
serves a far more serious consideration than those most 
vitally concerned have yet bestowed upon it. No man can 
confidently deny the possibility of such a result as is here 
indicated. No one familiar with the present public temper 
on the subject of railroad monopoly can reasonably question 
the probability even of a settlement of this kind being ere long 
resorted to. Under these circumstances, it is a question very 
pertinent to the times, whether the foundation of our rail- 
road aristocracy is as broad or as firm as it has been sup- 
posed to be, and whether a healthy solution of the great 
railroad problem is as difficult and as remote as some des- 
pondent people have represented it to be." 



CHAPTEK XXVII. 

GEORGIA REPUDIATION BONDS. 

How a Sovereign Southern State Cheated the North- 
ern Men who Helped Her in Distress.— A New 
Way to Pay Old Debts. — Cancellation ry Repu- 
diation op Just Claims for Cash Loaned to Sus- 
tain the State Government, Build Public Schools 
and Make Needed Improvements.— Bottom Facts 
of the Outrage. — The Eecent Attempt to Place a 
New Issue of Georgia Bonds on the Market, while 
the Old Ones Eemain Unpaid. — The Case Before the 
Attcrney-General of the State of New York.— He 
Examines the Legal Status of the Bonds in Connec- 
tion with the Savings Banks. — His Decision Prohib- 
its these Institutions from Investing the Hard 
Earnings of the Working People in these Doubtful 
and Dangerous Securities. — A Bold Effort to have 
the Eresh Issue of Georgia Paper Put Upon the 
List of Legitimate Securities of the New York 
Stock Exchange Firmly Opposed and Eventually 
Frustrated.— Reflections on the Bad Policy which 
Advocated Eepudiation and Has Injured Georgia 
Credit in the Eyes of the World. — General Obser- 
vations upon the Nature of Repudiation of States' 
Debts, and the Moral Influence on the General 
Credit of the United States. — Successful Appeal of 
Bondholders of the Repudiated Bonds to the Stock 
Exchange. 

ONE of the saddest events of my business experience 
arose from the purest motives on my part, to aid the 
South in the work of reconstruction, in the way of which, 
as I have stated in the previous chapter, President Johnson 
threw the greatest obstacles. 

I ventured my money and offered my friendship at a time 
when that section of the country stood in need of both 



256 THE GEORGIA REPUDIATION BOND SWINDLE. 

money and friendship, and used my best efforts to bring 
about the return of such feelings of fraternal harmony as 
should exist among all the citizens of this great country. 
For these kindly offices I was treated with the basest in- 
gratitude by some of the Southern States. 

I held a large amount of Southern securities, all issued 
for full value received, which went into the internal im- 
provements of that section, enhancing the taxable value of 
its property. These securities bore the great seals of the 
Sovereign States of Georgia and Alabama. 

The dishonor attaching to repudiation in these instances 
has been brought out in more glaring colors, from the fact 
that these States have long since become abundantly able 
to liquidate their obligations, and to erase the black spot 
from the escutcheons of their chivalrous people. 

The people themselves are not so much to blame as the 
disreputable politicians into whose hands the management 
of their affairs had fallen. 

It is of the sovereign and high-toned State of Georgia 
that I have most occasion to complain. On account of the 
bad faith of that State, through her political managers, I 
suffered a terrible reverse in my fortune, which came near 
crushing out my financial existence. 

It is not, therefore, surprising, I think, that having placed 
my faith in the integrity of that State and the promises of 
its officials and governing power, and having been so basely 
deceived, that I should now be aroused to act in self defence, 
fight for my rights and do all in my power to cause the 
bonds or securities for which I paid good money to be re- 
deemed, and to have my just claims satisfied. It has 
therefore, been incumbent upon me to leave no stone un- 
turned in fighting this battle, with the hope of recovering the 
money, or a part of it, that was filched from me through 
the ostensible defalcations of these sovereign and chivalrous 
States. 

About thirteen years ago the repudiation which has re- 



GEORGIA POLITICIANS " LOGROLLING.' ' 257 

rlected such disgrace upon the South became prevalent in 
that section, and took the character, for a time, of a severe 
financial epidemic. 

It was for this reason that the Legislature of the State 
of New York, as well as the legislatures of several other 
States, considered it necessary for the protection of the sa- 
vings banks, which are the custodians of many hundreds of 
millions, chiefly of the hard earnings of the working people, 
to prohibit these institutions from investing in, or loaning 
upon, the securities of any State in the Union that had with- 
in ten years previously repudiated any of its lawful obliga- 
tions. 

The laws of the State of New York, in chapter 409, section 
260, of the laws of 1882, provides that savings banks shall 
be prohibited from investing money in stocks or bonds of 
any State which, in the language of the statute, " has within 
ten years previous to making such investment by such cor- 
poration defaulted in the payment of any part of either 
principal or interest of any debt authorized by any legisla- 
ture of such State to be contracted." 

It was for this reason that the newly issued securities of 
some of the Southern States have been unable to find a rest- 
ing place in the monied institutions of the North. 

The State of Georgia, recently finding that she had some 
obligations becoming due, and seeing that money was cheap 
in the North, and that more than ten years had expired 
since she repudiated her former obligations, thought there 
was a good opportunity of issuing a fresh batch of these so- 
called securities, similar to those that had been dishonored 
in 1873. 

The politicians of Georgia thought there was a good 
opening in the State of New York to remove the restriction 
placed upon the savings banks in 1882. They saw that the 
Governor and the Legislature were both Democratic, with a 
Democratic Attorney-General also, and therefore determined 
to take advantage of this political condition, which they 



258 THE GEORGIA REPUDIATION BOND SWINDLE. 

supposed was Highly favorable to their scheme of stealing 
a march upon the holders of the old repudiated bonds of 
Georgia, who had been chiefly instrumental in getting the 
act passed for the safety of savings banks' depositors in the 
State of New York. 

The Georgia politicians aimed at having the restriction of 
the savings banks removed, so far as it related to their 
State, in order to afford them an opportunity of issuing sev- 
eral millions of 4^ per cent, bonds for the purpose of taking 
up an old issue of the 7 per cent, bonds, thus effecting a 
considerable saving to the taxpayers of their State in this 
reduction of interest. 

With the purpose of having this matter arranged as quietly 
as possible, two of the ablest lawyers of the State of Georgia 
were surreptitiously sent to Albany to make argument be- 
fore the Attorney- General, Mr. Denis O'Brien, and to 
attempt to convince that official, in a very plausible manner, 
why the restriction should be removed from the savings 
banks in the case of Georgia. No opposition was expected, 
and the enthusiastic hope was indulged by those who were 
engineering the scheme that upon this ex-parte statement of 
these astute Georgia lawyers a favorable opinion would be 
elicited from the Attorney-General of this State, which would 
justify the Superintendent of the Bank Department in issu- 
ing an order to remove the restriction which precluded the 
savings banks of New York from investing in Georgia 
bonds, on the ground that the State had not repudiated 
within ten years. The repudiation could be traced back 
thirteen years, instead of ten. 

Pursuant to this application, a small item of a few lines 
appeared in one of the Atlanta papers, which stated that Mr. 
Calhoun had just returned from Albany, having made a very 
strong and forcible appeal to the Attorney- General there, 
urging him that the restriction on the part of the savings 
banks be removed so far as Georgia was concerned. 

This item was telegraphed to me, and on receiving th$ 



SPECIAL PLEADING OP GEORGIA LAWYERS. 259 

despatch I notified the holders of the repudiated bonds, 
and wired the Attorney-General asking him when a hearing 
of the other side could be had. 

When the day arrived for the hearing before the Attorney- 
General, Mr. Calhoun was surprised to find that there was 
any opposition to his application, as the business had been 
so quietly managed that it was supposed by the Georgia 
members of the Bar that the bondholders would hardly be 
apprised of it until everything should be fixed according 
to the pre-arranged programme, and in favor of the repudi- 
ating State obtaining fresh and unlimited credit without 
settling up the old score. Mr. Calhoun was assisted in his 
able argument on the sovereign right of repudiation by the 
Hon. N. J. Hammond, Member of Congress and ex-Attorney- 
General of Georgia. 

In reply to these great lights of the Southern Bar, whose 
genius would have shone more brilliantly in an honest 
cause, I made the following address : 

Henry Clews' speech before the Attorney- General of the 
State of New York, June 20, 1885 : 

The original act of repudiation by the State of Georgia 
has been repeated each six months since that period to the 
present date, by the refusal of the State to recognize and 
pay the coupons on said bonds as they matured. This alone 
repeats the repudiation of that State twice each year for the 
past ten years at least, and therefore is a continuance of the 
repudiation from the time of the original vile act up to the 
present date ; besides which, the bonds repudiated had twen- 
ty years to run. The maturity of said bonds does not expire 
until 1890. The repudiation should be considered, therefore, 
as continuous during the entire period, from the date of the 
issue of said bonds until 1890, five years hence. If it is to 
be accepted that the test of a State's credit is to be able to 
show a record free from fresh repudiation for a period of 
ten years, and that repudiation is not a continuous repudia- 
tion until such obligations are fully settled and provided 
for, what is to prevent a State from negotiating a fabulously 
large amount of bonds, and thereby place an amount suffi- 
ciently large in her treasury to admit of bridging over for 



260 *f H E GEORGIA REPUDIATION BOND SWINDLE. 

the required ten years, and, after making such ample provi- 
sion, then pass an act, as heretofore, repudiating the bonds 
issued, and keep repeating it each decade ? Supposing the 
same rule held good with a bank robber — and there is, as 
far as integrity goes, really no great difference between the 
two, only one seeks protection in Canada and the other be- 
hind her sovereign rights, which is her Canada refuge. The 
robber breaks into a savings bank, guts it of several mil- 
lions of dollars, flees to Canada, and there lives in affluence 
for ten years. How silly it would appear if, after ten years, 
provided he could show a record free from thieving during 
that time, he had the legal right then to come back, and 
thereby be entitled to a clean record as an honest man, and 
in consequence be accorded a high credit. The position of 
the State of Georgia in assuming such a role, in coming here 
at this time to ask our savings banks to aid her in such a 
nefarious business, simply lacks a parallel for audacity. 
The management of savings banks must be conducted so as 
to inspire confidence with the depositors and with the entire 
community also. It is necessary, especially at panic pe- 
riods, for full confidence to be felt in the investments of 
such institutions. If the prohibition is removed, as is now 
sought to be, and savings banks be permitted to invest in 
Georgia securities, and one of them should buy $500,000 of 
the bonds, I venture the prediction that such an investment 
will sooner or later form the basis of a rumor which will 
cause a panic among its depositors and break that institu- 
tion. This would result in a most serious disaster to prob- 
ably thousands of poor people whose money had been 
lodged there for safe-keeping. The mere whisper during a 
panic that a certain institution had $500,000 of Georgia 
bonds, and they were about to be repudiated, would bring 
about just such a disaster as I have stated. 

I ask your Honor if it would be wise for any savings bank 
to be permitted by the Superintendent of the Banking De- 
partment to become thus exposed to ruin % A State that is 
abundantly able to meet her obligations and dishonors them 
is too despicable for either credit or tolerance in a civilized 
community, and it is a disgrace to the nation that States com- 
prising it have the power to make such obligations and repu- 
diate them at will and screen themselves behind their sove- 
reign rights, whereby they cannot be sued, and in consequence 
leave the outrageously wronged innocent bondholders with- 



GEORGIA SLANDERS HER CREDITORS. 261 

out means of redress whatsoever. If the United States 
Government ever expects to obtain that permanent high 
credit in the money markets of the world to which the im- 
mense resources of this magnificent country justly entitle 
her, the great and growing evil of State repudiation must 
be remedied. For States to repudiate with impunity, as the 
State of Georgia has done, leaving no means whatever for 
redress on the part of the victimized creditors, is a blot upon 
the escutcheon of the whole country. This is not a fight, 
your Honor, on the battle field against the South; it is a 
fight on the financial field, and, as it is second only in im- 
portance to the other, it must be settled, and now is the time 
to strike the blow, as it will do the most good in that direc- 
tion. We, the creditors of Georgia, have not only borne the 
loss and hardship of having our securities made valueless by 
a legislative body, and many of us ruined thereby, but we 
have also been vilely defamed — being branded as conspira- 
tors to rob the State — simply because we were found to be 
holders of these dishonored bonds. This has been done 
by the State to cover up her own infamy, and make it appear 
that we were the guilty parties and not the State. The at- 
titude of the State of Georgia, your Honor, is not unlike that 
of a pickpocket, who, after rifling his neighbor's pockets, is 
the first to cry " stop thief" to elude detection. All that 
the bondholders ask and claim is to have the entire case 
submitted to a proper judicial tribunal. This rightwe have 
been denied by the State, and the Constitution leaves us 
powerless to enforce it. The State simply says, the bonds 
are fraudulent and we will not pay them. It is a very 
remarkable circumstance, however, that there has not been 
a single one of the numerous officials, from ex-Governor 
Bullock down, who were connected with the issue of these so- 
called fraudulent bonds, prosecuted to conviction in the thir- 
teen years that have intervened since their issue. Still these 
bonds are all repudiated on the ground of being fraudulently 
issued, and the innocent bondholders alone are made to suffer 
the harsh penalty imposed for having staked their money on 
their belief in the honor and integrity of the people of 
Georgia, which it is quite apparent are now non est. 

I addressed a letter to your Honor on May 27th last, which 
contains important information in connection with these 
repudiated bonds. I ask permission to read this letter at 
the present time, so that it may become a part of the evi- 
dence in this case. 



262 THE GEORGIA REPUDIATION BOND SWINDLE. 

The following circular letter contains a variety of opinions 
analyzing the true relations of the State of Georgia to her 
creditors, and clearly setting forth the nature of her liability 
in the matter of the repudiated bonds in connection with the 
house of which I was the head : 

REPUDIATION EOBBEKY BY THE "SOVEREIGN" 
STATE OF GEOEGIA. 

" The divine doctrine of State Sovereignty, which makes a State 

too dignified to be sued for its debts, ought to make 

it also too respectable to cheat its creditors " 

Notice. — Managers of Insurance Companies or Savings 
Banks should be and are likely to be held responsible, by 
stockholders and depositors, for any losses incurred in the 
event of their buying or loaning upon any bonds issued 
hereafter by States which are under the cloud of repu- 
diation. 



New York, May 27, 1885. 

Hon. Wm. A. Post, Deputy Attorney -General, Albany, N. ¥.: 

Dear Sir : — I deferred answering your telegram of Satur- 
day until this morning for the purpose of ascertaining 
whether the bondholders' counsel would be in readiness to 
meet you at the time proposed, and only ascertained the fact 
this morning that he would, so I wired you accordingly. I 
presume that this Georgia repudiation question comes be- 
fore you for the purpose of removing the prohibition from 
the savings banks of this State to their buying or loaning 
upon Georgia State bonds, owing to that State being under 
the cloud of repudiation. The prohibition of the savings 
banks, issued by Mr. A. B. Hepburn, the former Superin- 
tendent of the Banking Department, was based upon a 
thorough and exhaustive examination in reference to all 
matters appertaining thereto. This I have reason to know, 
as that gentleman visited New York and took my testimony 
and others in the case. The State of Georgia has always 
charged, as the justification for repudiation, that K. B. Bul- 
lock, Governor at the time of the issue of said bonds, had 
issued the bonds without proper legislative authority, and 



GOVERNOR BUIXOCK ACQUITTED. 2(53 

esides had stolen or misappropriated most of the avails. 
About three years since Governor Bullock visited Atlanta, 
Ga., and demanded his trial under the several indictments 
against him. The trial came up soon thereafter, and he was 
acquitted on all the charges. This gentleman is now a resi- 
dent of Atlanta, Ga., and is to-day one of its most prominent 
citizens. It has been also charged that as he was a Northern 
born man, that he was a "carpet-bag'' Governor, and for 
that reason the bonds were not a legal issue. That attitude 
is also unwarrantable, as th6 ex-Governor remained South 
during the period of the entire war, and took a prominent 
part on the Confederate side, in giving aid and comfort, and 
thereby can justly be considered as being a Southerner and 
not a Northerner in his interests and feelings. Most of the 
bonds repudiated were passed upon as legally issued and 
properly signed, by our best lawyers, such as Messrs. Evarts, 
Southmayd & Choate, ex-Judge Emott, Abbott Bros., E. 
Randolph Robinson, the brother of Judge Sedgwick, of this 
city, and others. 

Some of these repudiated bonds were also passed upon by 
the New York Stock Exchange, and because repudiated were 
afterwards stricken from the list of securities to be dealt in. 
The face of these securities were worth par a few days prior 
to their repudiation, and immediately after that Act was 
passed were reduced to no more than the value of the paper 
upon which they were engraved. The same may at any time 
be the fate of any new securities to be issued by that State. 
Those who had these bonds were and are innocent parties, and 
amongthe sufferers are Trust Companies and savings banks. 
The Metropolitan Savings Bank holds $100,000 of the 7 per 
cent. Georgia gold bonds, bought about par ; the Brooklyn 
Trust Trust Co. holds $100,000 ; the Union Trust Co. holds 
$100,000; the Commercial Warehouse Co. held between 
$300,000 and 8400,000 of the bonds, and their repudiation 
caused the failure of that institution. The New York State 
Loan and Trust Co., Henry A. Smyth, President, also had 
$100,000 of the boods, which loss was largely instrumental 
in causing the collapse of that concern. The Broadway 
National Bank holds $200,000 of these bonds as collateral, 
upon which they loaned $160,000 ; Morton, Bliss & Co., 
Morris K. Jesup, Drexel, Morgan & Co., Ezra A. Boody, 
George Morgan, son-in-law of J. S. Morgan, of London ; J. 
.Bowman Johnson & Co., Richard Irvin & Co., L. Von Hoff- 



264 THE GEORGIA REPUDIATION BOND SWINDLE. 

man & Co., Eussell Sage and many other first-class parties 
that I can name are prominent sufferers resulting from 
Georgia's repudiation ; besides which, my firm in 1873 held 
over $2,500,000 State of Georgia securities, all of which had 
been paid for or advanced upon, and my firm's suspension 
at that time was attributable thereto. 

The only way to do, in my judgment, is to make the 
Southern States which are now under the serious cloud of 
repudiation, understand that their credit is impaired and 
facilities for obtaining money materially lessened because 
of it. Then, realizing that as their position, and finding that 
they are shut out of the financial markets of the world owing 
thereto, they will soon make a compromise with their lenient 
creditors, and remove the blot from their escutcheons. The 
Federal Government is comprised of the various States of 
the Union, and to-day enjoys as high a credit as any nation 
in the world. If the various States comprising the United 
States are permitted, however, to repudiate with impunity 
and screen themselves behind their sovereign rights so that 
creditors have no recourse, the odium will soon fall upon the 
General Government, and its credit will finally become 
tarnished if not crippled in consequence. The State of 
Georgia, as can be proven, received full value. The internal 
improvements in Georgia bear testimony of this. The tax- 
able property of the State has been immensely enhanced by 
these improvements, and the debt repudiated is a mere baga- 
telle as compared with the ability of the State of Georgia to 
provide for it. She has become rich in late years, and if the 
stain of repudiation should be wiped out, would stand an 
excellent chance of becoming a favorite resort for emigration 
and for the flow of capital. Emigrants from other countries 
to this, in locating, first look to the credit enjoyed by the 
State their attention is called to, and if found high, their 
conclusion is that there is safety for property, and if so, 
corresponding safety for life ; but they will not go to a repu- 
diating State, and in this way the South is held in check in 
the development of her resources, owing to the want of new 
blood. The bondholders of the State of Georgia have fre- 
quently offered to leave all points at issue in reference to 
Georgia's repudiation to the Courts of that State, to the 
United States District Judge, or to arbitration, the parties to 
be selected by both sides, all of which has been denied, the 
reply being the " bonds are repudiated, and we simply will 



INDIVIDUALS CANNOT SUB A STATE. 265 

not take any steps to provide for their recognition or pay- 
ment, and what are you going to do about it ? " Under the 
circumstances, creditors are powerless, of course, to do any- 
thing, as the State cannot be sued. If you desire it, I will 
send you a sample bond of some of the issues repudiated, so 
that you may see how beautifully the signatures are written, 
and how firmly fixed the seal of the Commonwealth is placed 
upon them, besides the magnificent steel engraved workman- 
ship of the Continental Bank Note Company of this city. If 
there was not a prospect of the State of Georgia being forced 
by public opinion to provide for these bonds at some future 
time, they would be worthy to be framed and hung up in our 
parlors as a complete and fine work of art. 

Judge Lochrane, former Chief-Justice of the State of 
Georgia, has wired me that he will appear before you on 
Wednesday ; Colonel E. A. Crawford, of Georgia, will also do 
so ; Messrs. Abbott Brothers, of this city, and others will 
appear before you. 

You will please append this communication as a part of 
the testimony, and should you desire more on the subject, 
call upon me therefor. 

I have the honor to remain, 

Your obedient servant, 

Henry Clews. 



Ed waed Brandon, Esq., Chairman of the Committee on the Ad- 
mission of Securities to the N. Y. Stock Exchange : 
Dear Sir: — It is currently reported that the State of 
Georgia is about to apply to your Committee to list a new 
issue of bonds. In behalf of myself and others who have 
suffered most seriously by that State's unwarrantable repu- 
diation of bonds, which have as full a right to an equal 
standing as representing the credit of the State of Georgia 
as possessed by the new bonds to be issued, and fully real- 
izing that the cruel fate of the former merely represents what 
may be that of the latter, I claim the right, as a member of 
the New York Stock Exchange, as a sufferer to the extent of 
several millions of dollars by the State of Georgia's bad 
faith, to protest against the admission of any new securities 
hereafter to be issued by that State until her repudiated 
bonds are recognized and provided for. 

Yours very truly, 

Henry Clews. 



266 THE GEORGIA REPUDIATION BOND SWINDLE- 

Ex-Governor Bullock's Democratic successor, soon after 
lie was elected to that position, appointed as Attorney and 
Agent for the State of Georgia, one of the State's ablest 
lawyers, a gentleman distinguished as having been a mem- 
ber of the Confederate Congress, to investigate all the busi- 
ness transactions between Henry Clews & Co. and the State 
of Georgia. Under his signature as Attorney and Agent for 
the State, he makes the following statement : "I would say, 
with a great deal of pleasure, that after a very thorough and 
complete examination of the books of account, papers and 
correspondence of Messrs. Clews & Co., so far as they 
relate to transactions of that house with the State of Georgia 
during Governor Bullock's administration, I am satisfied that 
in all the dealings of that firm with the State of Georgia, 
they have acted with both fairness and liberality, and I am 
convinced that in all these matters Mr. Clews did nothing 
that would not bear the closest scrutiny, and he did nothing, 
in my opinion, to affect his character for integrity and fair 
dealing. I make this statement with the more pleasure be- 
cause I began this examination of accounts of Clews & Co. 
under impressions very unfavorable to Mr. Clews." 



The opinion of ex-Governor Brown, now our able senior 
United States Senator, was asked by thirty -five members of 
the Legislature of 1873. In the course of a comprehensive 
and exhaustive argument, the distinguished Senator says : 
" The State will be driven to abandon this position (legisla- 
tive repudiation) and to permit a case to be made by her 
creditors to test the validity of these bonds in the courts of 
the country, or she must stand dishonored in the estima- 
tion of all good men, and her credit must sink to a ruinous 
depth." 

The late ex-Governor Alexander H. Stephens, ex- Vice- 
President of the Southern Confederacy, is on record as say- 
ing, in reference to this repudiation, that it is "nothing short 
of public swindling. Not less infamous than obtaining 
money under false pretences." But the partisan feeling was 
then so intense that even the lamented ex-Governor Jenkins 
was hardly accorded a respectful hearing in the Constitu- 
tional Convention, of which he was president, when he plead 
against sweeping repudiation without granting the holders a 



RECEIVING THE BENEFITS OP REPUDIATION. 267 

judicial hearing. Ex-Governor Jenkins said on that memor- 
able occasion : " Now, sir, I take this ground : that for the 
proper examination and investigation of these claims, neither 
the Legislature nor this Convention, nor the people them- 
selves, are a proper tribunal to decide these matters. They 
ought to be examined and determined judicially. It will 
now, I presume, be admitted that the five years' time between 
legislative and constitutional convention repudiation was not 
allowed to pass unnoticed by the parties having these bond 
claims against the State. Having waived our sovereignty in 
the past to allow the State to be sued in every county in 
tho State on claims for small-pox expenses, I submit that our 
sovereignty ought not to be plead to bar so important an 
issue as that now under consideration. The State can, in no 
event, be put to loss. The whole State has been largely 
benefited by the legislation and by the executive action 
which was subsequently repudiated. We have been for 
fifteen years past collecting annual taxes on fifty millions 
of enhanced value of our taxable property ; an increase 
which is directly traceable to the good effects of tho new 
railroads built under that legislative and executive authority. 
Shall we — can we honestly receive these benefits and repu- 
diate our liabilities ? " 



An interview with ex-Governor Kufus B. Bullock, of 
Georgia, May 29th, 1885: 

A reporter called upon ex-Governor Bullock at his rooms, 
Fifth Avenue Hotel, and obtained the following interview : 

Governor Bullock : " Any information in my possession is 
at your service. I have published from time to time, over 
my own signature, my views on this subject, and I have no 
objections to repeating them. I desire to say, however, that 
I am in no wise a party to the recent proceedings which have 
been had before the Attorney-General of New York. I was 
in the city on private business and without any previous 
knowledge of the proposed hearing. I attended the hearing 
out of curiosity, expecting to hear an argument by ex- Chief 
Justice Lochrane, and while there was invited by the Acting 
Attorney-General to respond to his inquiries. This I did 
with the result as reported in your valuable paper. During 
my administration in 1868-'69-'70 and 71, bonds of the 
State were issued for State purposes, and the endorsement 



268 THE GEORGIA REPUDIATION BOND SWINDLE. 

of the State was placed upon certain railroad bonds undei 
the authority of law. 

During the wild excitement that resulted in and followed the 
overthrow of the Eepublican government in Georgia, nearly 
all the acts of Eepublican administration were repudiated, 
among them its financial transactions, and up to this day and 
hour the questions of fact have never been permitted to reach 
any judicial tribunal. 

The people of New York State are fair-minded, law- 
abiding and honest, and whenever they can be informed of 
the truth will fearlessly follow it ; but with regard to the 
real merits of this repudiation, no light has reached them 
because our courts have been closed. 

It is asserted by the holders of these repudiated obliga- 
tions — and in this assertion I concur — that every bond was 
issued in accordance with law, and that the State is now in 
the enjoyment of the benefits resulting therefrom. In the 
exciting times to which I have referred, a majority of the 
then Legislature decided that the State was not bound by 
the acts of its predecessors, and therefore these obligations 
were null and void. 

This is, of course, a question of law, and not of legislation. 
I am sure that now, when partisan passion has subsided, 
both parties to this controversy would cheerfully acquiesce 
in any decision reached by our Supreme Court, and that the 
holders of these defaulted securities would accept whatever 
is awarded them in a long term bond at alow rate of interest, 
and on such an adjustment all parties, at home and adroad, 
could unite in maintaining the high financial credit to which 
the Empire State of the South would then be entitled. 

In December of last year the Atlanta Constitution, discus- 
sing this subject, used the following language : " The bur- 
den of his complaint is, that the bonds have never had a 
hearing in court. This comes with poor grace from the ex* 
Governor, who, when the validity of the bonds issued under 
his administration was being discussed by the legislative 
committee, was absent from this country, his whereabouts 
unknown, and his testimony not procurable. The bonds were 
'in court' then, and as Governor Bullock was not present 
with his evidence when it was needed, he should not complain 
that a new hearing is not had for his benefit." To this I 
made reply, which the Constitution kindly published, and I 
rill thank you to copy as follows : "I desire to say that 



GETS WEAI/THY ON OTHER PEOPLE'S MONEY. 269 

I was not absent from the country. My whereabouts were 
known, and my testimony was before the committee in the 
full and complete report of the financial condition of the 
State which I made to my successor, sustained by the official 
records of the Executive and State Departments. I never 
received a request from that committee to come before them 
in person, and my presence would not have added to the 
information in their possession. Every request received by 
me from my successors, to aid in their investigations, has been 
promptly complied with. In accordance with such request 
I met Dr. Bozeman, financial agent, Attorney-General Ham- 
mond and Governor Smith, in New York, and also subse- 
quently, Colonel Snead, Attorney for the State, and Colonel 
Kibbe, chairman of committee. No fact within my knowl- 
edge has ever been withheld, nor have I ever neglected any 
proper opportunity to contradict the statement that any of 
the bonds issued during my administration and reported to 
my successor were c bogus.' But, Mr. Editor, the question is, 
shall a debtor pass on the validity and enforce judgment 
against his own indebtedness? I submit tbat a legislative 
investigating committee is not ' a court ' in the sense that its 
findings are conclusive on questions of law. To hold a 
question so decided to be res adjudicate is to sustain a legis- 
lative usurpation of the judicial functions of the government. 
If your position be well taken, that because the Legislature 
has decided against the bonds, the case is res adjudicata, and 
the judiciary is precluded — of what avail is our constitu- 
tional guarantee that the executive, legislative, and judicial 
branches of the government shall be separate and distinct, 
and that neither shall encroach upon the functions of the 
other ? What protection has a citizen for his property if a 
legislative decision upon a legal question must be regarded 
as final res adjudicata ? 

Does not the taking of other people's money to build up our 
railroads, and refusing those people a hearing in courts of 
our own creation, before judges of our own election, indicate 
a want of confidence in the justice of our cause 'i The Ter- 
ritory and State of Minnesota used other people's money to 
open up her lands by the construction of railroads, just as 
Georgia did, pledged the faith of the State for repayment, and 
then repudiated, just as Georgia did. After twenty years' 
delay, justice has been done, and her obligations, as ascer- 
tained through her court, have been paid. I have faith to 



'270 THE GEORGIA REPUDIATION BOND SWINDLE. 

believe that the Empire State of the South will eventually 
keep pace with her sister States in the Union in meting oat 
exact justice through her courts to every man, come from 
whence he may. 

Hon. Wm. A. Post, Deputy Attorney- General of this 
State, by appointment, visited this city last Friday to take 
evidence on the Georgia repudiated bond question, the 
object being to determine the legal status of a new issue of 
bonds by the State of Georgia in connection with the sav- 
ings banks of this State. Owing to the repudiation of that 
State, at present these institutions are debarred from invest- 
ing in bonds of any repudiating State, and the effort now is 
being made by the representatives of the State of Georgia 
to remove that barrier, so that the savings banks can be gut- 
ted of their surplus means and filled up with the bonds 
issued by that State, which are more than likely to share 
the wicked fate of repudiation, as previous issues to the ex- 
tent of $8,000,000 have done. The savings banks managers, 
even in the event of obtaining a decision authorizing them 
to take Georgia bonds for investment, should be held per- 
sonally liable for any losses that may fall upon such insti- 
tutions if they hereafter invest the funds of widows and 
orphans in a security which, judging from past experience, is 
almost sure to be wiped out and made worthless. Mr. Clews 
charged that Mr. Calhoun's appearance in representing the 
State before the Attorney-General at Albany was a surrepti- 
tious proceeding, and was only heard of by mere chance by 
the holders of the repudiated bonds through a squib in a 
Georgia paper. He also stated that the bondholders had 
patiently waited twelve years for their money, and no body 
of creditors had ever been so lenient as those of the State 
of Georgia, and justice demanded that these long-suffering 
and much-defamed creditors should be settled with prior 
to the financial world according to the State of Georgia a 
sufficiently high credit to admit of her floating any new 
issues of bonds. A motion was made to adjourn the meeting 
until the 20th, which Mr. Post said he would accede to after 
asking ex- Governor Bullock a few questions in relation to the 
connection of the firm of Henry Clews & Co. and the State of 
Georgia during the time he was its Governor. He desired to 
make these inquiries now, as the ex-Governor was present and 
might not be at the adjourned meeting. Mr. Clews requested 



GEORGIA BONDS AS SECURITY. 271 

permission to state that his firm — Henry Clews & Co. — had 
never been agents for the State of Georgia, but merely 
acted for her as bankers and brokers. The agent of the 
State during the entire period of Governor Bullock's term 
of office was the Fourth National Bank of this city. He 
stated that his firm received no bonds, excepting by purchase 
or as collateral, and advanced money to the State as it was 
needed. At one time the State owed for said advances as 
much as $1,650,000 ; the money so advanced was stated by 
Georgia's officials as required to meet the expenses of the 
government of the State. Ex- Governor Bullock fully ratified 
Mr. Clews' statement. He admitted that the Fourth National 
Bank was the State financial agent, and that he had placed 
a large quantity of bonds with Henry Clews & Co. to market 
and as collateral for advances. " I will say," said the Gov- 
ernor, "that every dollar secured on the sale or pledge of 
these bonds was received by the State, and it was expressly 
agreed that the firm of Henry Clews & Co. should hold all 
the bonds in their hands as security for the indebtedness 
due them by the State of Georgia." 



Geoegia's Outlawed Bonds. 

Newspapers in Atlanta, Savannah and other parts of 
Georgia have violently assailed The G-raphie for its com- 
ments on the new issue of Georgia State bonds as affected 
by the repudiation of a former issue. These journals are 
short-sighted, as are the people of Georgia who imagine that 
they save money by outlawing the obligations of their State 
issued in the usual manner. We will not impute deliberate 
dishonesty to them, but they certainly do not place their 
own motives in a favorable light when they exclude the 
holders of the repudiated bonds from even the right to pre- 
sent their claims before the civil courts of Georgia. Ex- 
Governor Bullock has been berated in the same connection, 
and he cogently replies : 

" I have no pecuniary interest in the repudiated bonds or 
obligations, I have no lot or part in any scheme or com- 
bination by or through which public attention is or has been 
called to this matter. My attitude is that of a private citizen 
who has as high a regard for the honor and good name of 
Georgia as any man within her borders. I never obtrude 
" the bond question " upon the public attention. But when 



272 THE GEORGIA REPUDIATION BOND SWINDLE. 

my official action is attacked in that connection I shall neve* 
fail to assert and re-assert that the financial statement made 
by me to my successor in office was the exact truth and that 
its correctness never has and never will be successfully 
controverted. In that financial statement were many of the 
State obligations, which in a time of great public excitement 
and partisan zeal were e outlawed' by the action of a politi- 
cal body, and up to this day and hour the holders of such 
obligations have been denied that cool, dispassionate hear- 
ing of their claims which our courts alone can give. My 
* attitude ' is that Georgia is too great, that she stands too 
prominent in this country and in the world at large to accept 
the position of being a semi-annual defaulter and refusing 
to the creditor a hearing in her own courts. It is idle for 
me to assert or for you to deny the validity of the defaulted 
securities. That is a question of law, and no Georgian can 
defend his State while she slams the door of our courts in 
the face of our creditors. I assert that it does make a vast 
difference to Georgia whether her new securities are listed 
at the Exchange in New York. Our own people or other 
people can, of course, buy and own them, and I know the 
interest and principal will surely be paid, but unless the 
bonds are ' listed ' they are not, in mercantile parlance, a 
' good delivery,' and will not stand abroad as they should, 
equal with the best State in the Union." 

A State which once repudiates its obligations cannot be 
trusted not to do the same thing again. What guarantee 
can any investor have that the bonds which Georgia is now 
trying to put upon the market may not be outlawed by the 
next Legislature ? The Graphic has no interest in the matter 
beyond that of upholding public morals, the good name of 
the State and the rights of swindled creditors. The State 
which repudiates is as foolish as the imbecile who cut off 
his nose to spite his face.— N. Y. GrapJiic, June 6th, 1885. 

The extreme care with which so-called securities or new 
issues of bonds are scrutinized in this market now-a-days is 
shown in the opposition which has sprung up to the proposed 
listing on the New York Stock Exchange of $3,500,000 
new Georgia State bonds. While money is a glut in the 
markets and our banks are now carrying a larger idle reserve 
than ever before known in the history of business, there is 
no disposition to permit Southern repudiates to come in 



OPPOSITION OF NSW YORK BANKERS. 273 

and secure any part of the funds. The application to the 
Attorney-General to permit our savings banks to " invest " 
in the bonds, and the request that they be listed in the Stock 
Exchange, aroused New Fork bankers to action, and their 
opposition has been so far very effective. It has had this 
good, at least, that it has revived attention in regard to the 
repudiation of old obligations of Southern States. By its 
act of repudiation, Georgia mulcted the New York investors 
to the tune of millions. I know of one banker who now 
holds more than $2,500,000 of these bonds, on which there 
is an interest accumulation of twelve years' duration, and 
at least three leading financial institutions were carried 
to the wall by the same means. Now, it is considered very 
poor grace for the modern Christian statesmen of Georgia 
to pass around the hat again. Let the State first repudiate 
its repudiation, pay up old scores, and then it will be quite 
early enough to ask for further loans. The argument that 
the credit of the State is really benefited by the repudiation, 
as she has so much less obligations to meet, is a quaint one, 
and worthy the source from which it emanates. This is not 
the sort of " prosperity " that invites further investment of 
Northern funds. — Syracuse, N. Y., Sunday Herald. 



(Editorial from The " Atlanta National," Atlanta, Ga, June 1st, 1885. 

Georgia Bonds. 

When a Georgia bond is put on the market, our Demo- 
cratic friends cry out "Great is the Credit of Georgia." 
They claim that Georgia pays all of her obligations when- 
ever they are due, knowing their claim to be utterly false. 
Georgia has not only repudiated legal obligations, in the 
hands of innocent purchasers, but she denies the parties who 
have paid value for her bonds the right to take the judgment 
of her own courts on the validity of those bonds. So in the 
bond business the State of Georgia acts not only the role of 
the thief and robber, but also of the coward. The man 
who claims that Georgia meets all h^r obligations is simply 
a liar. 



Respecting State securities, investors are showing a very 
proper discrimination against the issues of States tainted 
with repudiation. The action of the Superintendent of the 
Banking Department of this State, in forbidding savings 



274 THE GEORGIA REPUDIATION BOND SWINDLE. 

institutions from investing in the new issues of the bonds of 
Georgia, has attracted attention to the danger of investments 
thus tainted, and is very generally approved by the invest- 
ing public as a check to future acts of this kind. The dis- 
position shown by certain managers of savings banks to put 
the funds in their charge into such doubtful securities should 
be strongly condemned ; and it is a question whether it is 
not necessary, as a protection to such depositors, to make 
such a use of the deposits of the poorer classes a penal 
offence. — Weekly Financial Circular of Henry Clews $ Co., 
June 6th, 1885. 



How the Georgia Bonds were Negotiated'. 

The following circular explains the manner in which the 
Georgia bonds were negotiated with my firm : 

New York, July 3, 1885. 
Hon. Wm. A. Post, 

Deputy Attorney -General, State of New York : 

The firm of Henry Clews & Co. did not solicit the account 
of the State of Georgia, but it was opened at the request of 
Mr. I. C. Plant, the leading private banker of Macon, Ga., 
and the most influential and affluent banker of the State of 
Georgia then and at the present time. Mr. Plant was 
brought to my office by Mr. P. C. Calhoun, President of the 
Fourth National Bank, which institution was the financial 
agent of the State of Georgia at the time. Mr. Calhoun in- 
troduced Mr. Plant to me, by giving that gentleman a very 
strong endorsement, and stated that Mr. Plant was in this 
city for the purpose of raising money for the State of 
Georgia, which money was required to pay off the members 
of the Legislature. Mr. Calhoun stated that his bank had 
loaned to Mr. Plant $400,000 on currency 7 per cent. 
Georgia bonds, and as money was very stringent at the 
present time and the calls were very numerous, he felt as 
though $400,000 was as much as he ought to loan in any 
one quarter. " But if you have any money, Mr. Clews, that 
you are willing to loan at the present time, if you will ac- 
commodate Mr. Plant, it may result in your doing some 
good business with the State of Georgia. I would say," 
said he, " that you cannot advance money in any quarter 
where it would be safer than to loan on the Georgia State 



HOW THIS LOAN WAS CONTRACTED. 275 

bonds which Mr. Plant will offer you. I know the State of 
Georgia well. I have ridden on horseback over almost every 
foot of ground in the State in my early life in my collecting 
trips. My father was in the saddlery and hardware busi- 
ness, and the larger part of his business was in that State. 
I know the people of this State ; and as an evidence of my 
opinion of the future of this State and its bonds, I will say 
that if I had my choice to put my money into these bonds 
of the State of Georgia, or those of the State of New York, 
to leave to my family, I would give the bonds of Georgia the 
preference, for the reason that her debt is so small as com- 
pared with the debt of the State of New York at the present 
time, and the future of the State of Georgia is destined to 
be one of great prosperity." Mr. Plant then said: u Mr. 
Clews, Mr. Calhoun has advanced $400,000 towards the 
amount I need, and I want $250,000 in addition. I know 
the money market is very tight [as it was at that time, 
money being worth 7 per cent, per annum and 1 per cent, 
per day commission]; still, I think, if you will loan this 
money to the State of Georgia, that it will enable you to 
make a connection which will prove profitable to you in the 
end." I said : " Very well, Mr. Plant, I will make the loan 
to the State of the $250,000 which you require." Mr. Plant 
then said : " Well, place it to the credit of the State of 
Georgia, and I will bring in 500,000 of Georgia 7 per cent, 
currency bonds, the same character of bonds which have 
been lodged as collateral with the Fourth National Bank. I 
will go at once to the Fourth National Bank, where they 
are, and bring them down here ;'' which he did. The $250,- 
000 was then placed to the credit of the State and a tele- 
gram to that effect was sent to the Governor, and it was at 
once drawn out on the official drafts of the State. This 
started a correspondence with Governor Bullock, in his 
official capacity, he being entirely unknown to me before. 
Other applications were then made direct by the Governor 
' for additional loans, which were made from time to time, 
until the amount so advanced reached to $1,650,000. After 
receiving, in addition to the 500,000 bonds referred to, 800,- 
000 more of similar bonds came into our possession from 
time to time as collateral, being put up at 50 cents on the 
dollar ; and when we afterwards received a large installment 
of the gold quarterly 7 per cent, bonds, having at that time 
an excess of collateral in our hands, we voluntarily for- 



276 THE GEORGIA REPUDIATION BOND SWINDLE. 

warded to the State 500,000 of the Currency 7s. This twis 
precisely and exactly the way my firm's connection was com- 
menced with the State of Georgia. Mr. I. C. Plant, who is 
still a banker of Macon, Ga., I am sure, will testify to the 
correctness o£ my statements. 

The State of Georgia gold 7 per cent, quarterly interest 
bonds were placed by the Governor of Georgia in my firm's 
hands as additional collateral against the advances made to 
the State, with full instructions to sell same and credit 
avails. Application was made by request of Governor Bui- 
lock to have this issue of bonds placed on the regular list of 
the New York Stock Exchange, and after a full investiga- 
tion by that body, they were admitted. A portion of these 
gold bonds were sold in this country and the balance in 
Europe. When the Georgia Bond Committee came here 
77,000 of these bonds were in Europe in the banker's hands 
there for sale, and my New York firm held 25,000, all others 
received having been sold. These 102 bonds were reported 
to this committee as unsold at that time, but soon there- 
after, and before the Act of repudiation was passed by the 
Georgia Legislature, these 102 bonds were sold and reported 
as sold, and 1 think the price was 97J, and the State's ac- 
count was credited with the avails, and the proper authori- 
ties of the State were duly notified thereof. Up to the time of 
sale of these 102 bonds our standing order to sell continued 
and was never revoked; because, however, these 102,000 
had been reported to the Georgia Bond Committee when in 
this city as being on hand at that time, they were repudi- 
ated, together with the other bonds which we were supposed 
to still hold. The New York Stock Exchange was called 
upon by the Treasurer of the State of Georgia to order 
struck from the list these 102 bonds, and the Exchange was 
compelled to be governed thereby, as official notice had 
been received of their repudiation. The following were the 
numbers of these bonds * * * * You will perceive 
that the numbers are not consecutive, thus showing that 
they were not the last of the bonds placed in our hands. 
The low numbers were received first and the highest num- 
bers last, in the deliveries made to us by Governor Bullock. 
Under this statement of facts, which lam prepared to prove, 
I insist that these 102,000 bonds are as binding upon the 
State of Georgia as any of those which are now recognized. 
My fellow members of the Stock Exchange who have made 



ACKNOWLEDGING THE DEBT. 277 

investigation fully confirm this opinion. A large number of 
the coupons of these bonds were paid by the State on these 
102,000 bonds, thus showing the State's recognition of them 
at one time. My firm repeatedly called upon the officials of 
the State of Georgia to pay the balance due, but we could 
get no response. After waiting patiently a very long time, 
we called in eminent counsel for advice in this matter, and 
^nder said advice the Governor and Treasurer of the State 
of Georgia were notified in the regular legal form that if the 
said indebtedness was not paid on or before a specified date 
the collateral in our hands, each item being specified, be- 
longing to the State, would be sold at public auction at the 
Merchants' Exchange Booms, 111 Broadway, at 12 o'clock, 
by A. H. Muller & Sons, auctioneers. This notice of said 
sale, together with list of securities, was inserted in the 
newspapers; the sale took place, and the 800,000 Currency 
and other bonds were disposed of to the highest bidders, 
and the State's account credited with the avails. All these 
securities should be considered, therefore, as having passed 
out of my firm's possession and in the hands of other hold- 
ers for value. The State of Georgia in this matter is cer- 
tainly amenable to New York laws, and the entire business 
was conducted in accordance with said law. Governor Bul- 
lock's successors did all they could to depreciate the securi- 
ties issued by their predecessors, and are responsible for 
the low prices which the State of Georgia bonds afterward 
sold for, as during Governor Bullock's administration the 
State 7s were at about par and the first mortgage Brunswick 
& Albany bonds, guaranteed by the State, sold at 90 and 
upwards. As an evidence of the high credit which my firm 
had worked up for the State, we bought out the first million 
issued of Brunswick & Albany First bonds guaranteed by the 
State of Georgia, in the Berlin and Frankfort markets at 104, 
and there were seven millions of bids therefor, and the one 
million had to be distributed pro rata amongst the said bid- 
ders. In testimony of the correctness of this state- 
ment, I refer you to Mr. Budge, the head active partner of 
Hallgarten & Co., and Mr.Schiff, the head active partner of 
Kuhn, Loeb & Co., of this city, who were interested with 
me, and through these two gentlemen the bonds were sold. 
After this great success, I ask you, or any fair-minded man, 
was not my firm entitled to continue to advance upon Bruns- 
wick & Albany first mortgage bonds endorsed bv Georgia 1 



278 THE GEORGIA REPUDIATION BOND SWINDLE. 

and as the 275 Cartersville & Yan "Wert bonds, endorsed by 
the State of Georgia, were offered to my firm shortly after 
this signal success as collateral, were they not also equally 
justified in advancing 167,000 upon them % and in that way, 
and in that alone, these securities came into our hands. I 
most positively assert that my firm never had any other 
pecuniary interests but as herewith set forth in these two 
enterprises. At the time of the repudiation of the State, 
my firm held 

750,000 Brunswick & Albany first mortgage bonds, en- 
dorsed by State of Georgia. 

275,000 Cartersville & Yan Wert first mortgage bonds, en- 
dorsed by State of Georgia. 

587,000 State of Georgia Gold 7s. 

350,000 Brunswick & Albany first mortgage bonds. 

400,000 Coupons cashed by us on the State of Georgia 
securities, but a legal claim against the State. 

800,000 State of Georgia Currency 7s. 



3,162,000 

Also, a judgment of 525,000 obtained in favor of Henry 
Clews & Co in the State courts of Georgia against the 
Brunswick & Albany Railroad Company, being an amount 
due my firm over and above all securities in our hands. My 
firm also obtained in the United States District Court of 
Georgia a judgment to secure our advances of 167,000 to 
the Cartersville & Yan Wert Company. Neither of these 
judgments have ever been satisfied. 

This leaves out entirely the 102,000 Georgia 7s (quarter- 
lies), as well as many other scattering lots of different is- 
sues of the Stake of Georgia securities. The past due 
bonds referred to by Mr. Hammond were being hawked 
about, both here and in London, for the purpose of forcing 
their payment, and the holders threatened to use them to 
interfere with the sale of the gold 7s which we were about 
to bring out in this and foreign markets. I mentioned this 
matter to Governor Bullock when on a visit here. He then 
directed me to buy up such of these bonds which were in 
troublesome hands, and as they were a demand claim 
against funds then in the State Treasury, all you have to do, 
he said, is to charge up the amount which you paid for said 
bonds to the State's account and retain in your hands the 
Donds as collateral, and when the State is flush enough I'll 



POLITICIANS DEPRECIATE THE BONDS. 279 

see that you are paid direct from the Treasury. These past 
due bonds belonged to us, and were taken up by our money 
and not the State's ; the 98,000 which were cancelled, which 
Mr Hammond refers to, were so cancelled by error, which 
I am fully prepared at any time to prove. The depreciation 
in Georgia State bonds which Mr. Hammond refers to did 
not exist during Governor Bullock's administration, but was 
brought about by his successors in office, as they did all 
they possibly could to depreciate the bonds of the State' 
authorized and issued by the previous Legislature. 
I have the honor to remain, 

Your obedient servant, 

Heney Clews. 



Geoegia Secueities and New Yoek Savings Banks. 

The efforts that are being made to place Georgia securi- 
ties in the savings banks of New York ought to be resisted 
for two very good reasons : First, such investment would be 
contrary to the law of the State ; second, even if it were 
legal it would be imprudent and unsafe. 

As to the authority of our savings banks to invest in these 
securities, it is understood that the opinion of the Attorney- 
General has been asked. On this point there is not much 
room for question. Savings banks are prohibited by law 
from investing in the stocks or bonds of any State that has 
within ten years defaulted in the payment of any part of 
the principal or interest of its debt. By a constitutional 
amendment adopted in 1877, Georgia ratified previous acts of 
the Legislature repudiating more than eight millions of its 
obligations. The excuse given for this proceeding was that 
the State's obligations had not been lawfully contracted, 
and therefore were not binding. On this ground it is 
claimed that Georgia securities do not fall within the prohi- 
bition put by the law upon the savings banks of New York. 
There would be some force in this view if Georgia were sus- 
tained by any judicial decision holding the bonds invalid. 
But it took advantage of that principal which protects a 
State against suit by a citizen. It decided the question by 
its own arbitrary edict. It gave its victimized creditors no 
voice in the matter. In the absence of judicial support or 
warrant, its action can be regarded only as a repudiation. 

But if there were no legal obstacle in the way, prudence 



280 THE GEORGIA REPUDIATION BOND SWINDLE- 

alone should deter any savings institution from investing in 
the bonds of a State that has so recently broken its faith 
and repudiated its obligations. The managers of a savings 
bank hold an exceptional trust. These institutions are the 
depositories of the earnings of the poor. The first consider- 
ation in their management is safety. "With that end in 
view the law imposes the most stringent regulations on 
their supervision and the disposition of their funds. Their 
investments are properly restricted to the safest and most 
unquestionable securities. There is neither authority nor 
excuse for taking any risk. Let individuals, if they wish, 
invest in Georgia bonds. That is their own business. But 
the managers of a savings bank cannot run any such risk 
without failing in their duty to thousands of poor depositors. 
— JV. Y. Herald, July 17, 1885. 



The Attorney-General's Decision. 

The decision of the Attorney-General, as was expected, 
wisely prohibited the savings banks of this State from risk- 
ing any of the hard earnings of their large number of depos- 
itors in such an uncertain security as Georgia bonds. 

The Bank Superintendent, Willis S. Paine, referring in 
his report of March, 1886, to this decision, says : 

" For some time there has been a determined effort to 
have the bonds issued by the State of Georgia accepted as a 
lawful investment for savings banks of this State. My 
predecessor in office declined to recognize their legal right 
to invest in bonds of the State mentioned. Late in 1885 
the State issued a considerable amount of bonds, which were 
offered to the savings banks on terms advantageous to them, 
and there was a desire on the part of some of the banks to 
purchase the bonds. The matter was by me referred to the 
Attorney-General to determine whether the State had 
defaulted. Several hearings were had, at which the various 
interests involved were represented by eminent counsel. 
The conclusions reached by the Attorney- General were 
based upon a consideration of the facts and circumstances 
relating to the issue by the State of Georgia of its guarantee 
of $1,500,000 of bonds of the Brunswick and Albany railroad, 
which he holds are in default of interest, the principal not 



GEORGIA'S DEFAUI/T ON ITS BONDS. 281 

yet being due. He reaches the conclusion that at least in 
the case of the bonds issued or indorsed in aid of the Bruns- 
wick arid Albany railroad it has defaulted, and this brings 
the case within the prohibition of the statute of New York 
regulating investments by trustees of savings banks. He 
therefore concludes that the savings banks of New York may 
not lawfully invest their deposits in the bonds of the State 
of Georgia." 

Georgia's New Issue. 

An attempt was made last summer to have several 
millions of the new issue of Georgia bonds listed on the 
Stock Exchange in a second hand style, through the instru- 
mentality of Mr. Fred. Wolf, who was presumably an inno- 
cent holder of these bonds. On this occasion I addressed to 
the Governing Committee the following protest : 

June 22, 1886. 
To the Governing Committee of the N. T. Stock Exchange : 

Dear Siks : — I have just been informed, whether cor- 
rectly or not, that, not the State of Georgia, but a person 
by the name of Mr. Fred. "Wolf, of this city, has applied to 
your Committee to list $3,300,000 State of Georgia 4^ per 
cent, bonds, and sets forth that said bonds are to take up 
those of the State maturing in February, April and July. 
I am advised that the bonds which matured, during the two 
months first named, long since past, have already been 
taken up by the State, so there remains but those which 
mature on the 1st of July next outstanding of the class of 
bonds referred to. At the time I was instrumental in defeat- 
ing the State of Georgia from removing a very necessary 
restriction imposed by a New York State law from lodging 
these same bonds upon the savings banks, the officials of 
the State of Georgia exulted over the fact that the said de- 
feat in no way injured the State of Georgia, as the bonds 
had already been disposed of at a satisfactory price to the 
State, and therefore no longer belonged to them ; thus show- 
ing that the State of Georgia does not make the application 
for the admission of these bonds to the Exchange, but 
clearly shows that they are in possession of the avails of 
these said bonds to provide for ; not only those that had 
matured but those that are due on the 1st of July next, con- 



282 the Georgia repudiation bond swindle. 

sequently it takes away the necessity of the State having 
the application now made favorably acted upon by your 
Committee. Mr. Wolf, therefore, makes the application in 
his own behalf, doubtless to enable him to extricate himself 
from his own speculative venture in these so-called securi- 
ties, which he was in hopes when he took them of turning 
over to certain saving banks who, by the Attorney-General's 
opinion, were precluded from buying these identical bonds, 
which misfortune, from the statements made by the officials 
of the State of Georgia, falls not upon them but the party 
who has bought the bonds. As the original plan of lodging 
these bonds in the savings banks was a failure and the poor 
people's money on deposit there was saved from wreck 
thereby, it is now sought to land them upon others, provid- 
ing the New York Stock Exchange can be secured to give 
character to them by listing them as is now attempted. My 
firm represents two seats on the New York Stock Ex- 
change and has large interest there and I protest against 
the proposition to list these Georgia bonds for regular deal- 
ings at the Exchange, as the State of Georgia is not only in 
default in payment of her bonds, both principal and inter- 
est, and long since past due, but besides has repudiated 
eight millions of her bonded debt which were issued for 
value received under the great seal of the commonwealth, 
properly signed, legally issued and in the hands of innocent 
parties who have acquired vested rights therein, and, there- 
fore, are the victims of a gigantic robbery by the repudia- 
tion of said bonds. It is but fair to assume that a State 
which undertakes to blot out by a legislative act, with- 
out being willing to submit any questions at issue to the 
judiciary — who alone have the right to decide upon such 
questions — find that to be so simple a method of paying 
debts will not unlikely be tempted to repeat repud- 
iation often in the future. These bonds now attempted to 
be foisted on the public cannot, by any possibility, be ex- 
pected to have any greater permanency of value than those 
that have already received the shameful fate of being re- 
duced by repudiation to the value of brown paper. I 
foresee, therefore, that if the N. Y. Stock Exchange lists this 
new issue of bonds, that by ficticious methods quotations 
may be obtained, and in ali probability the members of the 
N. Y. Stock Exchange be induced to deal in them and 
suffer the cruel loss that has already been my fate. The 



SHAM, REPUDIATION BE RECOGNIZED? 283 

State of Georgia, with interest to date, owes me and my old 
firm at least five million dollars ; therefore, I have a right, 
owing to my large interests in the Stock Exchange, to 
urge that the application to list these new Georgia bonds 
be denied, for I fear that should it be otherwise, many of 
the members whose seats are in part security for transac- 
tions, may be tempted to deal in these so- called " securities " 
and suffer great loss if not ruin thereby, for when the time of 
repudiation takes place the security in their seats at the Ex- 
change may be made valueless through said loss to honest 
creditors. When the State of Georgia wipes out the dis- 
graceful blot of repudiation which now stains the escutcheon 
of the commonwealth, she will then be entitled to have the 
facility which the New York Stock Exchange has the power 
of granting, to aid her in restoring her credit to rank along- 
side others. She will then be entitled to credit on a 3 per 
cent, basis similar to the States of New York, Massachusetts, 
Maryland and many others, but not before. 

Kespectfully yours, 

Henry Clews. 



SHALL REPUDIATION BE RECOGNIZED? 

New York, June 25, 1886. 

To the Governing Committee of the N. Y. Stock Exchange : 

Dear Sir : — I send you an exact copy, published in the 
Graphic newspaper under date of June 15th, 1886, of a bond 
issued by the State of Georgia, which you will perceive is 
an out-and out State bond and represents an issue of 1,800 
bonds of $1,000 each. The act of authorization of the 
State was passed upon by the eminent legal firm of Evarts, 
Southmayd & Choate, also by the late Judge Emott as being 
in conformity with law and in every respect a regular and 
legally issued bond of that State. The innocent holders of 
these bonds are the following: 

The Broadway National Bank $200,000 

The Metropolitan Savings Bank 100,000 

The Brooklyn Trust Co 100,000 

Eussell Sage 200,000 

Henry Clews & Co 486,000 

The Union Trust Co 100,000 



284 THE GEORGIA REPUDIATION BOND SWINDLE. 

Ezra A. Boody 200,000 

Eichard Irvin & Co 133,000 

The Commercial Warehouse Co. about 200,000 

The balance is in small lots scattered in numerous hands. 
None of these bonds was disposed of for less than 90 cents 
in money. The Broadway Bank loaned $160,000 upon theirs, 
taking them as collateral. Some other institutions held 
them as collateral against advances similar to that of the 
Broadway Bank. The whole of this issue was repudiated 
by the State. 

The State of Georgia also notified the Exchange that a 
large number of bonds known as Quarterly Gold Georgia 
Bonds were also repudiated. The numbers of these bonds 
were scattered in amongst an issue of two and one -half 
millions of that class of bonds, all of which were long pre- 
viously admitted to dealings at the N. Y. Stock Exchange. 
The N. Y. Stock Exchange having received notice from the 
State that they had been repudiated, ordered them stricken 
from the list. These bonds are all in the hands of innocent, 
bona fide holders, who paid in the neighborhood of par for 
them in all instances and the avails therefor were received 
by the State. 

Those not repudiated of these issues have since and are 
now daily quoted at the N. Y. Stock Exchange, the price 
being at the present time nominally about 112. 

I have only noted a part of the bonds repudiated by the 
State of Georgia, so that you may be convinced of the fact 
that the bonds are out-and-out State bonds and just as good 
an obligation issued under the great seal of the common- 
wealth of Georgia and as absolutely binding upon the State 
as the new bonds which are now attempted to be listed ; and 
should the latter be listed, the chances are that they will 
share the same fate as those noted. 

If a State can issue such obligations, and wipe them out 
by an act of repudiation with impunity, and the Stock 
Exchange ignore such shameful conduct, there will then be 
no safety in buying bonds issued by any State, as it is 
thereby made to appear that there is no stain left upon her 
escutcheon, the evidence of which is that the N. Y. Stock 
Exchange has backed them up in their action. Under the 
Constitution which gives sovereign rights to States a citizen 
holding these repudiated obligations cannot sue a State, 
therefore there is no redress for a great wrong done. 



A REMINDER TO SENATOR EVARTS. 285 

I shall be glad to appear before your Committee and give 
you all the evidence in the case before you decide upon the 
application now before you to admit $3,300,000 Georgia 4£ 
per cent, bonds. 

Very respectfully yours, 

Henry Clews. 



A REMINDER TO SENATOR EVARTS. 

In connection with this Georgia bond affair, even at the 
expense of stringing the subject out to a considerable length, 
I cannot omit the following communication to Senator 
Evarts on the subject : 

New York, April 13, 1886. 
Hon. William M. Evarts, Washington, D. 0. : 

Dear Sir — It is quite generally understood, from infor- 
mation lately received here from Washington, that there is 
soon to be sprung upon Congress a bill providing for large 
appropriations for the improvement of rivers and harbors 
and other so-called public improvements in the South. 
There is a feeling of strong opposition in financial circles in 
this city against the justice of the General Government 
making such appropriations to many of the Southern States 
at the present time. This opposition is based upon the 
fact that the State of New York contributes by taxation 
about one-fifth of all the revenue raised in this country 
which provides for the expenses incurred in carrying on the 
Government, so that whatever moneys are spent for the so- 
called public improvements, at least one-fifth of the amount 
is extracted from the pockets of the citizens of this State, 
through taxation ; and as many of our citizens have been so 
villainously victimized by the repudiation of the Southern 
States, especially by the State of Georgia, it is but just and 
fair to these victims, therefore, that no appropriations of 
money for the purposes named should pass Congress for the 
benefit of any State which is at present under repudiation. 
It is eminently proper that Congress should take a stand 
against this, as the very people who have been so robbed 
are to pay the cost. A large number of them have been 
ruined, as a penalty for believing in the honor and good 



286 THE GEORGIA REPUDIATION BOND SWINDLE- 

faith of Southern States, and while such claims remain un- 
paid, it certainly does appear harsh that these citizens 
should be taxed by the General Government and compelled 
to contribute to funds to be appropriated for the benefit of 
States now in default of both principal and interest for 
bonds issued by them under proper legislative authority 
and bearing the great seal of the commonwealth. The 
money paid for these bonds by confiding people has gone 
into public improvements in those States. If the Govern- 
ment desires to make appropriations, they should be made 
to the holders of these bonds, and the share to the various 
States be in their own bonds in place of money. The States 
thereby would take the place of the present holders. When 
repudiated bonds are all extinguished it will be time for the 
Government to begin the appropriation of money direct. No 
greater public improvement for the South, as well as for the 
credit of the entire country, would equal the removal from 
the various States of the blot of repudiation which now 
stains their escutcheons, and reflects most injuriously upon 
the credit of the General Government itself. 

Yours very respectfully, 

Henry Clews. 



ANOTHER STRONG PROTEST. 

September 2, 1886. 
James D. Smith, President of the Stock Exchange : 

Dear Sir — I beg to hand you herewith a memorial in 
relation to the new issue of Georgia bonds, signed by a num- 
ber of the largest and most important firms and corpora- 
tions in this city, most of whom are connected by member- 
ship with the Stock Exchange, and all of whom, like myself, 
are victims of the State of Georgia's repudiation. 

I understand that the subject of admitting this new issue 
of these bonds is to come up for consideration at the next 
regular meeting of your committee. Will you do me the 
favor of presenting this petition at said meeting ? Hoping 
this matter will receive your favorable consideration and in- 
fluence, I have the honor to remain, 

Yours very respectfully, 

Henry Clews. 



HOLDERS OF BONDS APPEAR TO THK STOCK EXCHANGE. 287 

To the Governing Committee of the New York Stock Exchange : 

We, the undersigned, holders of repudiated bonds of the 
State of Georgia, have learned that an application has been 
made for listing upon your Exchange new issues of bonds of 
that State. 

We respectfully urge upon you that so long as the name 
of Georgia remains dishonored by repudiation, you should 
stamp upon such application your absolute disapproval, and 
thus maintain the well known and uncompromising hostility 
which the New York Stock Exchange has always shown 
against bad faith and dishonest practice. 
August 24, 1886. 

RICHARD IRVIN & CO. DREXEL, MORGAN & CO., 

MORTON, BLISS & CO., FOSTER & THOMSON, 

JAS. B. JOHNSTON, NATIONAL BROADWAY BANK, 

S. W. MILBANK, By P. A. PALMER, Prest., 

HENRY CLEWS & CO., L. VON HOFFMAN & CO., 

HALLGARTEN & CO., RUSSELL SAGE, 

FULTON BANK OF BROOKLYN, C. F. TIMPSON & CO., 

By J. A. Nexsen, Cashier, HERMAN R. LE ROY, 

WALTER S. JOHNSTON, SAMUEL RAYNOR & CO., 

Receiver Maine National Bank, THE N. Y. WAREHOUSE & SECURITY CO., 
MORRIS K. JESUP, By S. C. Knapp, Secretary, 

JAMES R. JESUP, COMMERCIAL WAREHOUSE CO., 

J. F. Navarro, Prest. 

The petition of these gentlemen was granted, and true to 
its honorable record, the Governing Committee of the Stock 
Exchange refused to have anything to do with the bonds of 
the repudiating State of Georgia. 



CHAPTEK XXVIII. 

ANDREW JOHNSON'S VAGARIES. 

"Swinging Abound the Ciecle." — How Mb. Johnson Came 
to Visit New Yobk on His Eemarkable Tour.— The 
Grand Keception at Delmonico's.— The President 
Loses his Temper at Albany and Becomes an Object 
of Public Eidicule.— His Proclamation of "My Pol- 
icy" Ironically Received.— Returns to Washington 
Disgraced.— The Massacre of New Orleans.— The 
Impeachment of the President. 

AS I have attributed the ill luck of myself and others in 
certain business ventures in Southern securities to 
President Andrew Johnson, it will be necessary to describe 
some of the vagaries of that gentleman which had such a 
ruinous effect upon the investments of Northern men in the 
South. 

In common with several other "Wall Street men, I had an idea 
that the President might be favorably affected by the social 
influence of the North, if that were brought to bear upon 
him in the right way. So when we heard that he had been 
invited to attend the laying of the corner-stone in the erec- 
tion of a monument to the memory of Stephen A. Douglas, at 
Chicago, I got up a paper signed by several Wall Street 
men and other prominent citizens, urging the President to 
accept said invitation and also invited him to stop at New 
York, on his way to the West. 

The invitation was graciously accepted, and preparations 
were made at once to give him a suitable reception. It was 
hoped that this demonstration of our good will would 
have the effect of smoothing down the asperities of the Pres- 
ident, and that it might remove any harsh feelings that he 
entertained towards the members of Congress who represented 
the Eastern and Western sections, and hence prove a means of 



290 ANDREW JOHNSON'S VAGARIES. 

inducing him to advise the people of the South, over whom he 
had considerable influence, to lay aside their sentiments of 
hostility and attend to their business interests in a manner 
that should redound to the mutual benefit of the two great 
sections of the country. This was in 1866. 

The President left Washington about the end of August, 
accompanied by General Grant, Admiral Farragut, Secretary 
Wells, Postmaster Randall, and a few others of less note. 

When the party arrived in New York it was joined by 
Secretary of State Seward. 

The preparations for the President's reception were on a 
magnificent scale for that time, and the people turned out 
en masse eagerly to do honor to the Executive of the 
nation. There was a grand procession which conducted 
him to the City Hall, where he was received by the officials 
of the City and State, and the procession afterwards 
escorted him to Delmonico's, at Fourteenth Street and Fifth 
avenue, where a dinner was served in the most sumptuous 
style, with every mark of honor and respect befitting the 
distinguished guest and his numerous friends. 

There was an address of welcome pertinent to the occa- 
sion, and the President responded in a very happy style. 
This was said to have been one of his best efforts in oratory, 
in which he was, at times, exceedingly forcible and per- 
suasive. 

He was always pithy and powerful, and there has per- 
haps never been a President who produced stronger, more 
brilliant, and more argumentative state papers than Andrew 
Johnson. 

The audience at Delmonico's was thoroughly delighted 
with him, the dinner came off in a way that left nothing to 
be desired, and everything seemed to indicate that the pres- 
idential visit would be a potent influence in creating a new 
era of harmony between the two hostile divisions of the 
country. 

Everything was lovely until the presidential party ar- 



JEERED AND HOOTED AT ALBANY. 291 

rived at Albany, when it became manifest that the Presi- 
dent had set out with the full intention of giving the jour- 
ney the aspect of a political canvass, and of taking occa- 
tion to abuse his enemies in the strongest terms, and to vin- 
dicate his policy of reconstruction in opposition to that of 
Congress. 

The crowd which met him on his arrival at Albany was 
immense, and on the whole was disposed to accord the Pres- 
ident a kind and courteous welcome. 

The President was called upon to make a speech, in 
which he made violent attacks upon his supposed enemies, 
or those who opposed his policy, thereby sinking beneath 
the dignity which he was expected to maintain as President 
of the United States, to the level of a mere political dema- 
gogue. His utterances in that motley assembly, of course, 
were soon met by sharp opposition. There were many, 
however, who did not treat the fiery demonstration of the 
President seriously, and several of the crowd indulged in 
the pastime of firing off a few good-natured jokes at the 
tailor of Tennessee, who, by a mysterious fate, had been 
raised to such a dizzy eminence. These jests were taken 
seriously by the President, whose hot Southern blood be- 
came so aroused that he forgot the dignity of his office and 
station and condescended to bandy words, and exchange 
terms of ribaldry with people in the crowd. He then be- 
came a butt for savage ridicule. A small black flag was ex- 
hibited which seemed to have the same effect upon him as 
a red rag has upon a Texan steer. 

The President became furious, and losing entire control 
of himself, pointed towards a man in the crowd saying, "Who 
is that man who dares to hoist that black flag. Let him 
come up here and I will tell him what I think of him." 

This descent of personal dignity on the part of the Pres- 
ident was received by the audience with a feeling of ineff- 
able disgust. He had stooped beneath the level of the 
average electioneering stump speaker. He was greeted 



292 ANDREW JOHNSON'S VAGARIES. 

with jeers and hooting, and the meeting was turned into a 
roaring farce, in which the President played harlequin, to 
the great delight of the ignorant element in the crowd, 
and the terrible mortification of those who had conducted 
him thither. 

His friends were greatly incensed at his conduct. My 
business friends and I were heartily sorry that we had any- 
thing to do with this unruly Executive, who had evidently 
lost his head through the sudden acquisition of power. 

The President's journey was continued to Chicago by way 
of Cleveland, where he made similar outbursts to those dis- 
played at Albany. By the time he had reached Chicago he 
had become a public object of ridicule. He spoke so vocif- 
erously about " my policy " that the very boys in the streets 
began to utter these words ironically and jeeringly. 

The tour of the President was designated "Swinging 
around the circle,'' and when he returned to Washington he 
had become an object of national contempt, and the major- 
ity of the people had entirely lost confidence in him. 

One thing about this time that intensified the popular 
feeling of hostility against him was the attitude he assumed 
concerning the massacre of New Orleans, which occurred 
about a month before he started on his political tour. 

The Convention which had formed the free constitution of 
the State of Louisiana in 1864 had been ordered to reas- 
semble by its President. The Confederate sympathizers, 
who had been greatly encouraged by the acts of the Presi- 
dent to keep alive their old feelings of hostility to the 
North, resolved that the Eepublican Convention should not 
be permitted to meet. The ground they urged for this pro- 
posed action was that the Convention proposed to recom- 
mend the imposition of Negro suffrage upon the State. 
There was a riot and a terrible massacre, in which over a 
hundred lives were lost, and several hundred persons were 
wounded. The municipal authorities of New Orleans gave 
9,id and comfort to the rioters. 



THE REPUDIATION SCHEME. A ™ 

The Congressional Committee that investigated the cir- 
cumstances connected with the riot reported that the Presi- 
dent knew that riot and bloodshed were apprehended. He 
knew what military orders were in force, and jet without the 
confirmation of the Secretary of War, or the General of the 
Army, upon whose responsibility these military orders had 
been issued, he gave orders by telegraph, which, if enforced, 
as they would be, would have compelled our soldiers to aid 
the rebels against the men in New Orleans who had remained 
loyal during the war, and sought to aid and support, by 
official sanction, the persons who designed to suppress, by 
arrest and criminal process under color of the law, the 
meeting of the Convention ; and all this although the Con- 
vention was called with the sanction of the Governor and 
by one of the judges of the Supreme Court of Lousiana 
claiming to act as President of the Convention. The effect 
of the action of the President was to encourage the heart, to 
strengthen the hand, and to hold up the arms of those who 
intended to prevent the Convention from assembling. 

The President's opposition to the Reconstruction Bill 
probably rendered him more unpopular than any other 
executive act during his administration. The bill was 
passed by large majorities in both Houses of Congress. 

The President's repudiation scheme was another very 
unpopular recommendation, for which he was very strongly 
reproved by the action of Congress. He stated in his mes- 
sage of December, 1868: "That the holders of our secur- 
ities have already received upon their bonds a larger amount 
than their original investments, measured by the gold stand- 
ard. Upon this statement of facts, it would seem but just 
and equitable that the six per cent, interest now paid by the 
Government should be applied to the reduction of the prin- 
cipal, in semi-annual instalments, which in sixteen years and 
eight months would liquidate the entire national debt." 

This clause of the President's message was condemned by 
an almost unanimous vote of both Houses. 



29-4 ANDREW JOHNSON'S VAGARIES. 

The great event in President Johnson's career, however, 
was his impeachment trial, which lasted from March 5 
until May 26, 1868. He was arraigned at the bar of the Sen- 
ate, which was presided over by the Chief Justice of the 
United States, the Hon. Salmon P. Chase. 

The counsel of the President were Attorney-General 
Henry Stanberry, who resigned his position to defend the 
President, ex- Judge Benjamin E. Curtis, William S. 
Groesbeck, who acted as substitute for Judge "Jerry 5 ' 
Black, and Hon. Wm. M. Evarts. General Benjamin F. 
Butler made the opening argument against the President, 
accusing him of high crimes and misdemeanors. Hon. Wm. 
Lawrence, of Ohio, posted him on the law of impeachment. 
The chief charge in the articles of impeachment was the 
removal of Mr. Stanton from the office of Secretary of War, 
in alleged violation of the Tenure- of -office Act. According 
to this act Stanton had a right to hold office during the term 
of the President by whom he was appointed, and a month 
longer. He was appointed by President Lincoln, 

The question to be decided then was whether Johnson 
was serving out Lincoln's unexpired term, or whether he was 
President de facto. Judge Curtis took the latter ground, and 
argued, therefore, that Stanton's term had expired. 

At the conclusion of the trial, the Senate was addressed 
against the President by General John A. Logan and Mr. 
Boutwell. Thaddeus Stevens attempted to read a speech, 
but was too weak. He handed his manuscript to General 
Butler, who read it to the Senate, but it fell comparatively 
flat. The Hon. Thomas Williams, of Pennsylvania, read a 
speech in favor of impeachment, which was well received. 
The case on behalf of the Senate was summed up by Eon. 
John A. Bingham, who arrayed all the charges against the 
President in a very strong and unfavorable light. His con- 
cluding sentences were, 4< I ask you, Senators, how long men 
would deliberate upon the question whether a private citizen 
arraigned at the bar of one of your private tribunals of 



NARROW ESCAPE OF THE PRESIDENT. 295 

justice, for criminal violation of law, should be permitted 
to interpose a plea in justification of his criminal act that 
his only purpose was to interpret the Constitution and laws 
for himself ; that he violated the law in the exercise of his 
prerogative to test it hereafter, at such day as might suit his 
own convenience, in the courts of justice ? Surely, Senators, 
it is as competent for the private citizen to interpose such 
justification in answer to his crime as it is for the President 
of the United States to interpose it, and for the simple rea- 
son that the Constitution is no respecter of persons, and 
vests neither in the President nor in the private citizen 
judicial power. For the Senate to sustain any such plea 
would, in my judgment, be a gross violation of the already 
violated constitution and laws of a free people.'* 

The speech of "Our own Evarts" was the chef tfceuvre of 
his life, and probably did much to help the President's nar- 
row escape. As it was, he was only saved from impeachment 
by oae vote, namely, that of Mr. Ros% of Kansas. 



CHAPTEK XXIX. 

THE DIX CONVENTION. 

How the War Democrat, General Dix, was Elected Gov- 
ernor BY THE KEPUBLICAN PARTY. — THE CANDIDATES 

of Senator Conkling Eejected. — How Drx was Sprung 
on the Convention, to the Consternation of the 
Caucus.— Judge Eobertson's Disappointment. — Ex- 
citing Scenes in the Convention.— General Dix de- 
clines the Nomination, but Keconsiders and Accepts 
on the Advice of his Wife and General Grant.— How 
Dix^s Election Ensured Grant's Second Term as 
President. 

AMONG the political events of the last quarter of a cen- 
tury in which I took an active part, in common with 
some other Wall Street men, I think the Utica Convention, 
at which General Dix was nominated for Governor of this 
State, is entitled to special notice, particularly on account of 
its effect upon national politics. 

I was a delegate to that Convention. Just as I was step- 
ping from the train to the platform at Utica I was met by a 
gentleman who introduced himself to me as the Private Sec- 
retary of Senator Conkling. He said he came to convey 
an invitation to me from the Senator to be his guest during 
my stay in that city. He escorted me to the carriage in wait- 
ing, and I was taken to the palatial mansion of the Senator. 
I was the only resident guest during my stay — an honor 
which I highly appreciated. 

Several gentlemen were invited that evening to din- 
ner, amongst whom were Hon. Chester A. Arthur, A. B. 
Cornell, Wm. Orton and General Sharpe. 

At the conclusion of a sumptuous repast the subject mat- 
ter relating to the Convention was introduced by Senator 
Conkling. The Senator turned to me and said : " Mr. Clews, 
why would not George Opdyke be the best man for Gov- 
ernor?" Mr. Opdyke and Senator Conkling had always 



298 THE DIX CONVENTION. 

been on excellent terms, and a few weeks previously this 
aspirant for Gubernatorial honors had been a guest at the 
house of the Senator, and General Grant had been there at 
the same time. It was apparent, therefore, that Mr. Opdyke 
had gained special recognition from the Senator as his can- 
didate for Governor, and that the choice had been sanc- 
tioned by General Grant. So the visit of these two distin- 
guished guests seemed to indicate that the matter had been 
virtually, harmoniously and finally arranged, simply await- 
ing the official approval of the Convention. Hence, the 
point of the Senator's inquiry directed to myself. 

I replied : u Senator, I have a very high regard for Mr. 
Opdyke, as a man of great ability, as well as a brother 
banker, but as we have, all of us, a greater interest in what 
is to be done at this Convention, with a view of re-electing 
General Grant, we must, in my judgment, sacrifice all other 
interests thereto. Looking at the matter from that point of 
view, I am bound to say, therefore, that George Opdyke is 
not our best man. As you remember, he was Mayor of the 
city of New York at the time of the great riots of 1863, which 
was the most critical period of the country's . existence, and 
it was generally understood that in his official capacity he 
showed the white feather. While I admit that the excite- 
ment at the time was calculated to intimidate some of the 
strongest hearts, still, Mr. Opdyke, as Chief Magistrate of 
the city, was supposed to be equal to the emergency, and to 
meet it with firmness, irrespective of personal danger. He 
was expected to be equal to the task of ordinary self sacri- 
fice in such a position, and he did not come up to popular 
expectation." 

" And you will recollect, Senator," I continued, " that your 
own brother-in-law, that able, worthy and popular man, Hon. 
Horatio Seymour, was so far carried away by his predilections 
then, that he addressed the crowd of peace-breakers as 
" friends/' I confess that when a man like him was so pro- 
nounced on that side it was a difficult matter for a Mayor to 



conkung's man not available. 29'J 

have backbone enough to withstand the pressure. But pub- 
lic opinion is not in the habit of making such fine distinctions 
to excuse want of courage." 

" If this is not an ample reason," I said, u I can give you 
another, which should be sufficient to determine that 
Mr. Opdyke is not our best man at this time. He is young 
enough, however, and may be available at a future period, 
when the asperities associated with these troublous times 
have been fully smoothed down. During the war Mr. 
Opdyke had the misfortune to be a special partner in a 
clothing manufacturing firm which had received a contract 
from the Government to make clothing for the poor fellows 
who were fighting our battles for the salvation of the country. 
The clothing made by this firm was rejected on account of 
the inferiority of the material, and this is said to have been 
the first application of the term ' shoddy ' to army clothing 
in this country." 

Mr. Conkling seemed to be amazed at my statement, and 
admitted that his protege would not do. He felt consider- 
ably embarrassed in regard to his position with reference 
to Mr. Opdyke. He said, "Mr. Opdyke is here and expects 
the nomination. Some one ought to tell him to withdraw." 

Thereupon Mr. A. B. Cornell volunteered to undertake 
this delicate duty. He promptly performed it, and after- 
wards reported that the work had been accomplished. He 
said that Mr. Opdyke at once consented to comply with the 
modest request, but was so mad about it that he had left the 
city by the first train for home, being unwilling to remain for 
the convention. 

Prior to his departure, however, he had advised the Hon. 
W. H. Robertson, who was the next prominent candidate, of 
his withdrawal, and of the support of his constituency so far 
as his name could control it. 

Mr. Robertson, who had been prominent in the prelimi- 
nary canvass, was gratified at this turn of affairs, and en- 
couraged by his new accession of strength. He was quick 



300 THE DIX CONVENTION. 

to embrace the opportunity now left open, as there were no 
other candidates whom he feared. So the whole of that 
night he worked arduously and faithfully for the object in 
view. 

When I left the Conkling mansion next morning, after 
breakfast, I mingled freely with the delegates, and found, 
from the efforts made the previous night, that the nomina- 
tion of Judge Eobertson was a foregone conclusion, and the 
candidate himself was sure of it. The Eobertson boom had 
become suddenly popular. In fact, it was in the air. 

I was invited to General Arthur's parlors, where the 
caucus had its headquarters. It was customary with 
General Arthur, in those days, to take parlors for that pur- 
pose at State Conventions. I found the rooms filled with 
distinguished members of the party, and it was assumed by 
all that Eobertson was the candidate for Governor ; it was 
also proposed that we should march in a body to his hotel, 
to congratulate him, and to assure him of the fact that we 
were all for him. I declined to be of the number on that 
mission, to the great chagrin of some of my friends. When 
asked for my reasons, I said that I had no feeling of per- 
sonal hostility towards Mr. Eobertson, but as the New York 
Times had not been pleased with his conduct while State 
Senator, and had severely criticized him thereafter, I felt 
satisfied that under no circumstances could we rely upon the 
Times to support our ticket if he were at the head of it ; 
and as that was the only paper in New York that we had to 
fight our battles then, it was all important that we should 
nominate a ticket that would not be antagonistic to it, in 
order that we might have its endorsement and full co-opera- 
tion. 

The rest of the gentlemen went to pay their respects to 
Judge Eobertson, as pre-arranged, and during their absence 
I went to the telegraph office and sent the following mes- 
sage to General John A. Dix, to his residence at 3 West 
Twenty-first street, New York : 



A WILD HURRAH FOR DIX. 



301 



" Tou are favored by many of the delegates for Governor. If nominated 
will you accept ? For the sake of the country, answer in the affirmative. 

"Henry Clews." 

To this I received the following : 

4 'I have telegraphed your dispatch to West Hampton, where my father 
now is. 
"Aug, 21 1872. "JohnW. Dix." 

A short time afterwards the Convention met, and the 
name of Eobertson was presented. The management had 
been so ably conducted since the departure of Mr. Opdyke, 
that there seemed to be an overwhelming hurrah in favor of 
Eobertson, though it was evident that many of the delegates 
did not know why they cheered, except by force of imitation. 
The Convention at first, as has been the case on many similar 
occasions — except that there never was any occasion precisely 
similar to this one — did not seem to know its own mind, and 
was apparently well in hand by the management. Several 
most laudatory speeches were made in favor of Eobertson, 
which placed him on the very pinnacle of popularity with the 
Convention, as manifested by the cheering and wild hurrahs 
with which the speeches were received. The management 
was thoroughly convinced that the popular tide had begun 
to flow in favor of their candidate, beyond the possibility 
of ebbing until it carried him to port, and there was prob- 
ably no man in that enthusiastic audience more fully con- 
vinced of the fact than Eobertson himself. 

Several other nominations were made, but that of Eobert- 
son overshadowed them all. 

When the gavel was about to descend on the choice of 
the people, as expressed through their intelligent represent- 
atives by every sign of enthusiastic approval, the audience 
being almost exhausted with this high pressure of excite- 
ment, and when it was just prepared to relapse into a more 
thoughtful and deliberate mood, I sprung General Dix on 
the Convention. The mere mention of the name of that 
veteran seemed to inspire the vast assemblage with new 
life. The announcement acted like magic, and appeared to 



302 THE DIX CONVENTION. 

throw all the previous work of the Convention into utter 
oblivion. 

After Mr. Bruce and the Hon. E. Delafield Smith had 
spoken, I said : " On behalf of the bankers and business 
men of New York, regardless of party, the nomination of 
John A. Dix would do more for the Eepublican party in the 
national contest than any other that could be named. No 
other man would receive equal confidence of the great 
monied interests of the metropolis." 

The scene that followed the remarks of these gentlemen 
and myself is indescribable. The whole audience arose to 
their feet and cheered vehemently. If the house had been 
struck with lightning the caucus managers could not have 
been more surprised, and Judge Kobertson must have be- 
gun to doubt his own identity. 

Concerning the scene in the Convention at this juncture, 
the New York Herald the next morning had the following : 

" The enthusiasm excited by the representatives of Henry 
Clews carried the Convention, and it only wanted to put the 
question to the delegates to result in a triumph for the Dix 
interest. There was great confusion in the hall at this 
moment. Delegates attempted to make themselves heard 
from all parts of the hall. There were heard the first notes 
of the coming avalanche of victory for the Dix ticket. The 
stentorian voice of a delegate from St. Lawrence, mighty 
almost as the cataract of Niagara, was heard above the din, 
proclaiming that the St. Lawrence delegation endorsed the 
nomination of Dix. Further enthusiasm was thus excited. 
Then followed Kings, Jefferson, Cayuga and others, lost in 
the cheering that was incessantly kept up. The whole of 
the delegation seemed under one impulse to fall into line 
under the flag raised by Dix as the standard-bearer of the 
party. Then came a demand that no ballot should be taken, 
formally or informally, but that the nomination of General 
Dix be made by acclamation.. The Hon. William A. 
Wheeler, the chairman, said such a motion was not in order, 
as there were other candidates before the Convention. This 
difficulty, like every other, was soon swept away in the 
tornado of excitement consequent upon the sudden and un- 
expected course of affairs, so lately garbled and mixed up, 



THE PRESS RATIFIES THE CHOICE. 303 

had taken ; and the clear course that the name of one man, 
held back to the lucky moment, had arrived, to give it a talis- 
manic power, opened to the previous bewildered senses of 
the delegates when the Bald -Eagle of Westchester, the pro- 
poser of Judge Robertson, arose and announced the with- 
drawal of his nominee's name. A thunder of applause fol- 
lowed this announcement, which was echoed and re-echoed, 
when the several other proposers withdrew in quick succes- 
sion the names of their candidates. Then came again the 
call to put the name of General Dix by acclamation to the 
Convention, The vote was put and was unanimously carried, 
with the greatest excitement ever before witnessed at a Con- 
vention. 

The New York Times said editorially : 

"The Convention of this State has placed at the head of 
its ticket two of the strongest names it could possibly have 
selected. In General Dix it has nominated a Democrat who 
is free from all the reproaches which the last twelve years 
have brought upon the Democratic party — a man whose 
character is without a stain, whose strenuous efforts to assist 
the Union during the rebellion ought never to be forgotten, 
who has been one of our most indefatigable assistants in 
the work of reform, and whose integrity and abilities alike 
entitle him to the respect of the public. No one can doubt 
that if we have General Dix as Governor of this State the 
affairs of the community will be managed with discretion, 
dignity and a high sense of honor. "We purposely refrained 
from recommending candidates to the Convention, but now 
that all is over, we need not disguise our opinion that Gen- 
eral Dix was the very best man that could have been chosen. 
Honest Democrats will gladly support him, [Republicans have 
every reason to arrange themselves by his side, for he has 
identified himself with every great work in which they have 
been interested. He has always done his duty, no matter 
what position he has occupied, and we shall be proud to 
assist in electing him as Governor of this State. If we could 
not trust such a man as General Dix, it would be very hard 
to carry on the work of popular government at all.'' 

At the close of the proceedings I sent the following 
despatch to General Dix: 

" I took the responsibility of putting your Dame forward as a candi- 
date for Governor, and now rejoice in apprising you of your nomina- 
tion by tne Convention by acclamation. 

11 Henry Cutr s." 



304 The dix convention. 

On my return to New York, to my utter dismay, I found 
the following telegram awaiting me : 

" West Hampton, Aug. 22, 1872. 
" Henry Clews : 
" I have been compelled to decline. 

"John A. Dix." 

1 That afternoon I went down to Long Branch to see Gen- 
eral Grant, and spent the evening with him. I showed him 
the despatch from General Dix, declining the nomination, 
and expressed the opinion that it was all important that he 
should be prevailed upon to reconsider his first resolve, and 
permit his name to head our ticket. " You know, General," 
I said, " Dix is a war Democrat. He will act as a bridge to 
bring over to our ranks all the war Democrats. It was chiefly 
for that reason that I sprung him on the Convention." 

General Grant realized the position at once, and fully 
agreed with me. 

I said : " General, you must write a letter to General 
Dix, urging him to accept the nomination." He wrote to 
General Dix in a day or two. The veteran was greatly 
moved by a letter from a renowned brother in arms, but 
still had some difficulty in making up his mind, lest he 
might lay himself open to the charge of inconsistency. And 
here comes in the predominating influence of lovely woman, 
even cruelly deprived as she is of the ballot. General Dix 
held his final answer in abeyance until he should consult 
his wife. 

General Grant to General Dix. 

Following is the letter which General Grant wrote after 
my interview with him : 

"Long Branch, N. J., Aug. 24, 1872. 
44 My Dear General: 

" I congratulate you upon the unanimity and enthusiasm of the Utica 
Convention on the occasion of your nomination for the honorable and 
responsible position of Governor of the great State of New York. 
Especially do I congratulate the citizens of that State, almost irrespec- 
tive of party, upon your nomination. I believe you will receive the 
active support of the great majority of the best people of the State, 



GEN. GRANT AND MRS. DIX PERSUADE HIM. 3C5 

and the secret sympathy of thousands who may be so bound up by 
party ties and pledges as to force them to support your opponent. 

•* But to doubt your election would be to impugn the intelligence and 
patriotism of a people by whose enlightened discrimination such good 
men as Tompkins, Clinton, Marcy, Fish, King and Morgan have been 
lifted to the Chief Magistracy of the Empire State. With your election 
reforms in the State will naturally follow, which all acknowledge have 
been much needed for years. 

" No one acquainted with the political history of New York for the 
past eight years will claim that all the abuses of legislation are due to 
Democratic rule, but members, or at least pretended members, of both 
political parties share the responsibility of them, 

" When I read the proceedings of the Convention of the 21st inst., 
and of the unanimity of feeling in favor of you and your associates on 
the State ticket, I felt that victory had been already achieved and re- 
form inaugurated in the State of New York. 

" Again, I congratulate you, not upon the prospect of being Gov- 
ernor, but upon having it within your reach to render such services to 
your State. 

'* It is a happy day when conventions seek candidates, not candidates 
nominations. This dream has been realized in the action of the Con- 
rention of the 21st inst. at Utica, New York. 

**I have the honor to be, General, your most obedient servant, 

U. S. GRANTS 

** Gen. John A. Dix, N. Y," 

Genebal Dix's Reply. 

•' Leafield, West Hampton, N. Y., 

August 28, 1872. 
•* My Dear Generax* : 

** I am very thankful to you for your kind letter of congratulation ok 
my nomination for the office of Governor of this State. You are awar?«, 
no doubt, that I declined it before the Convention was held. 1 a^ 
deeply sensible of the honor conferred on me, especially by the manner 
in which it was tendered ; but my objections to the acceptance of tho 
nomination are so strong, that I would not think of it a moment, were 
it not for the deep concern I feel in the result of the election, and the 
great public interests at stake. 

•* I expect Mrs. Dix to arrive from Europe on the 2nd or 3rd proximo, 
and as soon as I am able to confer with her, I shall reply to the letter of 
the President of the Convention, advising me of my nomination. 
"I am, dear General, very respectfully and sincerely yours, 

JOHN A. DESL* 
"His Excellency, U. S. Grant." 



306 THE DIX CONVENTION. 

It is evident from this correspondence that General 
Grant's letter, which I take the credit of having inspired, 
reinforced by the latent, loving power and good judgment 
of Mrs. Dix, assisted in the wise decision of the war Demo- 
crat to accept the Eepublican office which was judiciously 
thrust upon him. 

The election of Dix made the second calling and election 
of Grant sure. The Republican party took General Dix 
into its fold, aud the effect was, as I had anticipated, to bring 
thousands of others similarly situated, to vote, at the Presi- 
dential election, for General Grant. 

The Dix nomination was the worst black eye that Mr. 
Greeley received during that campaign, and the Sage of 
Chappaqua acknowledged on his death bed that that event, 
together with the Grant mass meetings at the Cooper Insti- 
tute, described in another chapter, sealed his political doom. 



CHAPTEE XXX. 

CONSEQUENCES OF THE UTICA (DIX'S) CONVENTION. 

A Chapter of Secret History.— Conkling gets the 
Credit for Dix's Nomination and his " Silence Gives 
Consent" to the Honor. — Robertson Eegards him as 
a Marplot. — The Senator Innocently Condemned. — 
The Misunderstanding which Defeated Grant for 
the Third Term, and Elected Garfield. — How the 
Noble "306 "were Discomfited. — "Anything to Beat 
Grant." — The Stalwarts and the Half Breeds. — 
"Me Too." — The Excitement which Aroused Gui- 
teau's Murderous Spirit to Kill Garfield. 

THE political events succeeding the Utica Convention and 
the nomination of General Dix for Governor contain 
some inside history of more than ordinary importance. 

Had I not sprung General Dix on that Convention at 
the peculiar moment, as described in the last chapter, 
Judge Kobertson would have carried the day with fly- 
ing colors. It was a sudden and crushing blow to the 
prospects of himself and his political friends, and it dissi- 
pated some of the brightest hopes and brilliant schemes that 
had ever originated in the fertile brain of Senator Conkling. 
As a consequence of the unique turn that aflairs took on 
that day, the Senator was placed in a false position in rela- 
tion to some of his best friends. Several of the latter 
were put in an attitude whereby they misinterpreted the 
actions of Senator Conkling at that Convention, and unjustly 
accused him of betraying friends that he had promised to 
support. This was the result of a misconception on their 
part, that the Senator was the prime mover of the coup d'etat 
that surprised the Convention in the nomination of General 
Dix. 

The credit was awarded to Conkling, without any hesitation 
or inquiry, and he was either too proud, or too indifferent 



308 CONSEQUENCES OF THE UTICA (DIX's) CONVENTION. 

to public opinion to explain. If he had explained his posi- 
tion candidly the chances are that his explanation would 
have been taken in a Pickwickian or political sense. In 
fact, he was in a position where he could hardly escape the 
responsibility of Dix's nomination, and everybody was ready 
to believe that the movement in favor of Dix was too good & 
thing to be engineered by a man of less calibre. 

It would have been useless, therefore, for anybody else 
to explain, as the person attempting to do so would only 
have been laughed to scorn. 

Judge Robertson, himself the greatest sufferer by the 
curious turn affairs had taken, was the first to believe that 
the nomination of Dix was one of Conkling's masterstrokes 
of political policy. He never thought of looking to any 
other source for its emanation. He believed in his soul 
it was the work of Conkling, and he thinks so to this day. 

I happened to have been better informed, however ; but 
my explanation would have hardly passed muster at that 
time, and I would have been charged with egotism if I had 
attempted to explain. I think an explanation is now in 
order, however, and may point a moral as well as help to 
adorn a tale. 

History is said to be philosophy teaching by example, 
and one great historian has said that no one event in itself 
is any more important than another, except from what it 
teaches posterity by its example. So, for the benefit of 
posterity, I now state the facts on this historical principle. 

I am willing to make affidavit on the revised edition of 
the good book that prior to the Utica Convention the name 
of General Dix was not even lisped by Senator Conkling 
within my hearing, nor was Dix ever thought of even re- 
motely by the Senator as a possible candidate. 

I am almost certain that the Senator had taken no action, 
that could possibly conflict with the interests of Judge 
Robertson prior to the mention of the name of Dix at the 
Convention. In fact, with the exceptions previously stated^ 



SEPARATING CHIEF FRIENDS. 309 

I am quite certain that the name of Dix was a genuine sur- 
prise to the entire Convention, managers and all. 

Judge Robertson thought differently, however. He be- 
lieved that Conkling was the cause of his defeat, and to 
this misapprehension is due the enmity that sprang up be- 
tween these two men, and worked with various results to 
the defeat of the political aims of both ever since. 

As I was Senator Conkling's guest, this seemed to create 
a conviction in the mind of Judge Eobertson, without any 
inquiry into the matter, that I had acted at the instigation 
of Conkling in bringing Dix to the front ; whereas the con- 
ception of Dix as the best candidate originated solely with 
myself, nor did I ever suggest the idea to Conkling until I 
addressed the Convention, in favor of General Dix. 

Believing as he did, that the Senator had played the mar- 
plot to such perfection at Utica, Eobertson was naturally 
on the watch for the first opportunity that would enable 
him to get even with the friend whom he suspected of hav- 
ing so basely betrayed him, and with having blocked his 
way to political preferment. 

This opportunity came at the Chicago Convention, when 
the Utica statesman was managing matters very successfully 
to nominate General Grant for a third term. 

It is curious that the very circumstance which was most 
conducive to Grant's success for the second term was the 
remote cause of his defeat for the third. Senator Conkling 
had no idea of the deep-seated enmity that lodged in the 
breast of Eobertson. He had done nothing, knowingly? 
to merit it, and had been calculating on the co-operation of 
Eobertson, as usual. He was not aware of the smouldering 
fire of vengeance that lay latent in the bosom of his friend. 
He supposed that Eobertson and his co-mates in politics 
were with him as in days of yore in the support of General 
Grant. He imagined that he had gone to Chicago with a 
full hand, but instead of that he was short of some of his 
best cards, and his enemies had them stocked in a way that 
finally brought him to grief. 



31' CONSEQUENCES OF THE UTICA (DIX's) CONVENTION. 

Conkling only discovered his dilemma after the Conven- 
tion met, when he found to his dismay that Eobertson had 
bolted the Grant ticket. 

Eobertson had first made an alliance with the Blaine 
party, but finding an insufficiency of power among that party 
to carry his point against the solid phalanx of the Grant 
movement, he joined forces with John Sherman's supporters, 
who were under the management of James A. Garfield. 

The able strategist from Utica, at the head of his 306 
chosen followers, so disconcerted the Sherman contingent 
that it also failed to carry the necessary number of guns. 

As day after day passed without any change, it seemed as 
if the Conkling forces had adopted the motto of Napoleon's 
old guard, " The Guard dies, but does not surrender." 

At length Eobertson and his lieutenants collected the 
shattered ranks of Blaine and Sherman, and with Garfield 
at their head, like Ney attacking the English centre at 
Waterloo, hurled them with desperation on the solid square 
of Conkling, which still remained unbroken. 

The united forces, however, with the war cry, "Anything 
to beat Grant !" carried the day, Garfield was nominated 
and Conkling retired in good order, but greatly discom- 
fited. 

Eobertson had taken up this cry at the Convention in the 
same spirit that was displayed by another man about whom 
a good story was told during that campaign. He had got 
that shibboleth on the brain, " Anything to beat Grant !" 
As the story goes, a prediction had been made by some 
religious enthusiast that the world was coming to an end 
early in November of that year. A preacher was reminding 
his congregation, one Sunday, of the prediction, and the 
possibility of its fulfilment — at least that it was well to be 
prepared for such an event. At the conclusion of his exhor- 
tation, a man in the congregation arose to his feet, and in a 
solemnly pathetic voice said, " Thank God." At the end of 
the service the minister's curiosity was excited to converse 



ANTAGONISM BETWEEN BI.AINE AND CONKUNG. 311 

with the man who had so fervently thanked heaven for what 
most people regarded as a universal calamity. He saw the 
man, and asked why he had made such a remarkable ejacu- 
lation at the prospect of such a terrible consummation. 
" Anything to beat Grant," was the reckless and self-sacri- 
ficing response. 

It was in this spirit that the Kobertson party made the 
fight at Chicago, and in this spirit that they triumphed. It 
was anything to beat Senator Conkling, however, so far as 
Judge Kobertson was concerned, who on other grounds 
would probably have preferred Grant. Thus he avenged 
upon the wrong man his defeat at the Utica Convention, and 
I was permitted to escape scathless, though innocently re- 
sponsible for blasting his Gubernatorial aspirations. 

This was not the end of Judge Eobertson's enmity to 
Senator Conkling, however. When the new Government 
came into power, Garfield, in making up his cabinet, selected 
Blaine as a member of that special body. This created a 
bad feeling between Blaine and Conkling, as it seemed to 
the latter like a continuation of the conspiracy between 
Bobertson and Blaine, hatched at the Chicago Convention. 
Thus the seeds of a strong and bitter antagonism were 
sown between these two leading spirits in the Republican 
party, each aspiring to be at least the power behind the 
throne. 

After Garfield's inauguration Blaine was made Secretary 
of State. Great credit for the Presidential success was not 
only due to Mr. Blaine, but in a large degree to Judge Bob- 
ertson also, as without his assistance Garfield could not 
have been nominated. So it was necessary to take care of 
Judge Bobertson too. This was done by making him Col- 
lector of the Port of New York. These appointments were 
severe political blows, which, in the nature of circumstances, 
fell with full force upon the devoted head of Senator Conk- 
ling. 

These events led to the sudden resignation of Senator 



312 CONSEQUENCES OF THE UTICA (DIX's) CONVENTION. 

Conkling and Senator Piatt, " Me Too," and a very serious 
division in the ranks of the party, under the respective 
names and banners of the Stalwarts and the Half-Breeds. 

The excitement growing out of the political battle between 
these factions aroused the intemperate zeal and insane de- 
lusions of Guiteau to kill the President. Thus the thread 
of cause and effect, when followed up in this way, is en- 
tangled in the deepest mystery. 



CHAPTER XXXI. 

GRANT'S SECOND TERM. 

The Best Man for the Position and Most Deserving o? 
the Honor. — How the "Boom" was Worked Up ?n 
Favor op Grant. — The Great Financiers and Specu- 
lators all Come to the Front in the Interest of the 
Nations Prosperity and of the Man who had Saved 
the Country. — The Great Mass Meeting at Cooper 
Union. — Why A. T. Stewart Kefused to Preside. — 
The Eesults op the Mass Meeting and how they 
were Appreciated by the Friends of the Candidate, 
Leading Representatives op the Business Community 
and the Public Press Generally, Irrespective op 
Party. 

I WISH to relate briefly the part which I took in the re- 
election of General Grant, whose defeat, when he was 
spoken of as a candidate for the second term, was fore- 
shadowed among a large number of politicians of every 
stripe. There were serious divisions in the ranks of his 
former friends and adherents, and an organized effort was 
made to destroy his prospects a long time in advance of the 
meeting of the Philadelphia Convention. 

All the political machinery of his enemies, and of dis- 
appointed office seekers and their friends, was put in force, 
and all the tactics and prejudices employed that were put 
into operation with greater success four years later. 

I felt assured that the nomination of any other man might 
result in the defeat of the party, and that it was absolutely 
necessary to its strength, maintenance and autonomy that 
General Grant should again be our choice. He had been 
tried for one term and found to be a very satisfactory execu- 
tive. There was no important risk involved in trying him 
for a second term > while the experiment with another man 
in the then sensitive, unsettled and tentative condition of 



311 GRANT'S SECOND TERM. 

reconstruction, might have been injurious to the best politic 
cal and industrial interests of the country ; and the experi- 
ment would have been especially risky if the nominee should 
have been a Democrat. 

The people of the South were not then in a proper frame 
of mind to be trusted with any power implying the mere 
possibility of obtaining a controlling influence in the affairs 
of the Government. I perceived it was important that the 
Eepublicans should make a nomination that had a fair pros- 
spect of being successful, and I felt satisfied that the result 
would be extremely doubtful if we should nominate any 
other man. 

Besides, no other man was more deserving of the national 
compliment, considering that he had done so much to termi- 
nate the struggle for national existence, and had been the 
chief force in suppressing the Rebellion. His genius and 
courage had been chiefly instrumental in preserving to the 
country the blessing of a Republican form of Government. 
For this boon no people could ever be too profuse in the 
manifestations of their gratitude. 

This was the patriotic feeling deep in the hearts of the 
people at large, but there was a secret movement engineered 
by u sore-head" politicians, behind whom were even more 
dangerous enemies, to thwart patriotic purposes. Some of 
these conspirators had been brooding over latent schemes of 
anarchy for a long period, and had been attempting to put 
them in organic shape before half the first term of General 
Grant had expired. They were hard at work training public 
opinion, by every means in their power, to prevent Grant's 
renomination. 

This hostile element was sedulously hatching scandals 
and ventilating them in subsidized newspapers, and through 
various other disreputable channels. 

This opposition increased in violence and intensity, and 
as the time approached when the country was to choose its 
next President, the renomination of General Grant became 



THE BUSINESS COMMUNITY FOR GRANT. 315 

% matter of serious doubt, even to some of his most enthusi- 
astic supporters. It had become a foregone conclusion that 
the Democrats would draw largely from the Republican 
ranks, and the anxiety on this point was intensified by the 
hostility of the Tribune, and the prospect of Horace Gree- 
ley's candidacy. It was absolutely necessary, therefore, that 
an energetic effort should be made, and the requisite steps 
taken to ensure General Grant's success at the Convention. 

I entered into this feeling with a great deal of personal 
enthusiasm. What was my motive ? some one reading this 
may ask. 

Because I believed the sacredness of contracts, the stabil- 
ity of wealth, the success of business enterprise, and the 
prosperity of the whole country depended on the election 
of Grant for President. 

If the reader wants to get at the selfish motive, as all read- 
ers do, I shall be perfectly candid with him in that respect 
also. Of course I knew that Wall Street business would 
boom in the wake of this general prosperity. That was the 
selfish motive, from which no man is free. Of course, I ex- 
pected to share in Wall Street's consequent prosperity. 

I did not want office, as several of the highest were offered 
me which I respectfully declined ; and no office in the gift 
of the people would have compensated me financially ; and 
moreover, my highest ambition has been satisfied in my own 
line of business. 

I went to work then in the interest of Grant for the second 
term. I employed numerous canvassers at my own expense, 
to find out the minds of the representative business men on 
the subject, and to talk the matter up with those interested 
in Republican success. These men reported to me daily, 
and in a short time I had sounded the minds of that part of 
the business community who had the greatest stake in the 
country, and whose influence is always most felt when any 
important achievement is to be compassed. I sent out a 
petition, and obtained the names of a splendid array of 



bl6 GRANT'S SECOND TERM. 

merchants and business men of all shades of opinion and 
politics in favor of Grant. Following is the heading of the 
petition : 

"A Public Meeting. 

" To the merchants, bankers, manufacturers and other bus- 
iness men in favor of the re-election of General Grant : 

u The undersigned, desiring publicly to express their earn- 
est confidence in the sagacity, fidelity, energy and unfalter- 
ing patriotism, so signally displayed by Ulysses 8. Grant in 
securing the restoration of peace at home, upholding nation- 
al rights abroad, and in maintaining throughout the world 
the honor of the American name, do hereby invite their fel- 
low citizens to assemble in mass meeting at the Cooper In- 
stitute, on Wednesday evening, the 17th of April, 1872." 

This call was chiefly the result of the personal canvass 
which I had instituted a few weeks previously. I selected 
the names of the persons to be called on from day to day, 
and kept these men working the matter up, until I had se- 
cured almost all the reputable business firms in the city of 
New York. The following, whose original signatures I have 
still in my possession, were prominent in the list : 

WILLIAM E. DODGE, K. H. McCURDY, 

JOHN C. GREEN, JOSEPH SELIGMAN, 

HENRY F. VAIL, THEODORE ROOSEVELT* 

GEORGE T. ADEE, WILLIAM ORTON, 

REV. SAMUEL OSGOOD, CHARLES P. KIRKLAND, 

WILLIAM H. FOGG, PETER COOPER, 

BENJAMIN B. SHERMAN, HUGH J. HASTINGS, 

ROBERT L. STEWART, SAMUEL B. JUGGLES, 

WILLIAM HENRY ANTHON, CORTLANDT PALMER, 

E. D. MORGAN, JONATHAN EDWARDS, 

JAMES BUELL, CHARLES KNEELAND, 

H. B. CLAFLIN, S. R. COMSTOCK, 

W. R. VERMILYE, PITT COOK, 

WM. M. VERMILYE, THOMAS J. OWEN, 

CHARLES L. FROST, OTIS D. SWAN, 

NATHANIEL HAYDEN, GEORGE OPDYKE, 

JESSE HOYT, HARPER & BROS., 

WILLIAM B \RTON PEAKS, JOHN C HAMILTON, 

EMIL SAUER, GEO. W. T. LORD, 

JACOB OTTO, SAMUEL T. SKIDMORE, 

JOSEPH STUART, JONATHAN STURGES, 

J. STUART, WM. H. VANDERBILT, 

THOS. GARNER ANTHONY, SHEPARD KNAPP, 

FREDERICK S. WINSTON, WM. H. ASPINWALL, 

MORRIS FRANKLIN, J. S. ROCKWELL. 
WM. C. BRYANT, 



eidn't have his wife's relatives promoted. 317 

It is sad to reflect that these are all now numbered with 
;he mighty dead. 

These names will serve to show- the great number of 
prominent people gradually depaifing from us every few 
years. 

The name of the number of those yet alive who signed 
that petition is legion. In fact those who did not sign it 
were those whose names were not worth having. To put it 
mildly, I secured through their own signatures, by this 
method, all whose names were desirable. Our forces having 
been mustered in this way, the next thing was to disconcert 
the enemy, and inspire our own party by showing our avail- 
able strength, and the power and enthusiasm behind the 
J&ovement. This we proceeded to do by calling a mass 
meeting at the Cooper Institute for April 17, 1872. 

The meeting was an immense success, in numbers, brains 
and respectability. The hall was crowded and the outside 
meeting was several times larger. 

Mr. A. T. Stewart had been invited to preside. He had 
been a warm friend of General Grant, but had then become 
lukewarm and indifferent, owing to the fact that he had 
failed to obtain a Custom House promotion for one of his 
wife's near relations. I had endeavored for several days to 
soften Stewart's heart and get him to consent to be chair- 
man of the meeting, but he was incorrigible. Finally, I 
succeeded in extorting a promise from him that if he did 
^ot vote for General Grant he would not vote against him, 
but beyond this it was impossible to mollify him. He was 
2 paragon of obduracy when he had once resolved upon any 
course. Even the recollection that he, though an alien born, 
had been offered the second highest position of trust in tho 
nation, Secretary of the Treasury, which he could not accept 
on account of being in business, failed to draw out his feel- 
ings of gratitude sufficiently to forget the fancied slight of 
refusing his wife's relative promotion. 

Failing to secure Mr. Stewart, I invited Mr. William E. 



318 grant's second tern. 

Dodge to preside. He graciously accepted the invitation 
and made a very good chairman indeed. 

The array of Yice-Presidents was said to excel anything 
that had ever appeared in a similar list of the proceedings 
of any meeting in this city. 

I had invited Fred. Douglas and P. B. S. Pinchback, the 
eminent colored orators, to the meeting, but they could not 
attend, as they were at a New Orleans convention of their 
own people. Mr. Eainey, a colored gentleman, spoke most 
eloquently and with telling effect. This was the first tim*" 
since the war that a colored orator had addressed a meeting 
of whites on politics in New York, or probably in the 
North. Prior to this the colored vote for Grant had been 
in doubt, as Horace Greeley, whose name was a word to 
conjure with among these people, had recently been swing- 
ing around the circle down South, with a view of capturing 
alike the vote of the colored people, who loved him, anc 
that of the Democrats, who hated him. By a curious fatality 
he failed to capture either. As Blaine has truly said Oi 
him : c ' No other candidate could have presented such ar 
antithesis of strength and weakness." 

There had been no meeting for a long time previous tc 
this that had been the cause of such an enthusiastic awaken- 
ing in the party and among politicians generally over the 
whole country, as this great demonstration of the people at 
the Cooper Union. It crushed the aspirations of the so< 
called Independents and smothered the lingering hopes oi 
the Democratic party. 

In order to show the influence of this mass meeting upon 
the destiny of political parties in the Presidential election 
of 1872, it will be necessary to take a retrospect of the im- 
pression it made on parties most deeply interested in the 
result, and to make known their private opinions on the 
subject Inside history of this nature is always instructive, . 
«lnd time has clothed with the attribute of public property, 
what at one time was a very precious political secret. 



THE candidate's opinion of the "boom." 319 

Among the striking incidents of the night of that meeting 
i distinctly recollect one that was truly prophetic, in regard 
to Senator Henry "Wilson, of Massachusetts. A number of 
the speakers and other prominent men took supper with me 
at the Union League Club after the meeting, and in pro- 
posing the health of Senator Wilson, who had spoken so 
eloquently, I nominated him for the Vice-Presidency, and 
sure enough he was afterwards elected to that position. 

I shall take the liberty in this place of introducing to the 
reader a few letters hitherto unpublished, which throw con- 
siderable light on the value of the political work done by 
myself and friends at that time, and how it was appreciated 
by those most deeply interested in its outcome. 

The following from the White House shows how anxious- 
ly the current of events was being watched from that great 

centre : 

' ' Executive Mansion, \ 

Washington, D. C, April 17, 1872. j 
My Dear Clews • 

I have received your several interesting letters in regard to the great 
meeting in New York, and have shown them to the President, who read 
them with deep interest. I have not written any suggestions, because 
I know you, being on the ground, could judge so much better of the sit- 
uation, and the temper of the New York people. You have done a great 
work, and this evening's success will, I have no doubt, be the reward of 
your efforts. We shall look anxiously for the reports. What you say is 
curious about the use of Dix's name and others. Our people are at work 
in Congress getting up telegrams signed by the Republican members of 
all the State delegations endorsing the administration of General Grant. 
I wish we had thought of these sooner, but still we can get them all in 
time, I hope. I have just come from the House, where I was looking 
after this matter. Wishing you every success, 

I remain yours very sincerely, 

HORACE PORTER, 

(Sec'y to President Grant<) 

After the meeting the President's Secretary writes as 

follows : 

Executive Mansion, ) 

Washington, D. C, l 
April 19, 1872. J 
Mr Dear Clews : 

I have only a moment before the mail closes to say how earnestly 
all congratulate you upon the great success of the meeting. 



320 GRANT'S SECOND TERM. 

It was glorious and genuine. We read the proceedings in full in the 
Times last night. It has created a marked effect in Congress and else- 
where. Nearly every Republican in the House would have signed the 
congratulatory telegrams, but the movement was started so late in the 
day that the paper was not presented to any one. 

Yours very truly, 

HORACE PORTER. 

Tlie following, from the Hon. Eoscoe Conkling, is a very 
flattering reminiscence, which I highly appreciate : 

United States Senate Chamber, > 
Washington, April 19, 1872. > 
My Dkar Sir : ' 

As a New Yorker and a Republican, I want to thank you for the great 
service you have rendered our country and our cause in conceiving and 
carrying forward the great meeting of night before last. 

The effect of it will be wholesome and widefelt ; it was most timely, 
and its whole management was a success. Our friends all, I think, know 
jmd appreciate the large debt due you in the premises. 
Noting your suggestions as to the future, I lay them to heart. 

Yours sincerely, 

ROSCOE CONKLING. 
Henry Clews, Esq. 

The New York Herald's special from Washington next day 
after the meeting said : 

" The President, in conversation with Senators who called 
upon him this morning, expressed himself as much pleased 
with the demonstration in New York last night, which he 
regards only as evidence of the popularity of the Repub- 
lican party. He has been assured, from reliable sources, 
that the leading Democratic merchants and bankers in 
different parts of the country are anxious that the Repub- 
lican party may completely triumph at the coming Presiden- 
tial election, as the surest way of maintaining our credit, 
and resisting anything like a financial crisis, which they 
regard as certain if their own party should succeed." 

Following are the address and resolutions expressed 
through the representatives of a grateful people in favor of 
the herd who had saved the country : 
Grant Meeting at Cooper Institute, March 17, 1872. — Address and Resolutions. 

ADDRESS. 

Hon. E. Delafield Smith, on behalf of the Committee of Arrange- 
ments, read the following address, remarking that it was prepared by 
one of the most eminent and substantial of our business men : 



PUBLIC AFFAIRS UNDER GRANT'S ADMINISTRATION. 321 

The administration of public affairs under the government of Presi- 
dent Grant has been eminently wise, conservative and patriotic ; our 
foreign relations have been conducted with a scrupulous respect for the 
rights of other nations, a jealous regard for the honor of our own ; the 
noble aspiration with which General Grant emphasized his acceptance 
of his great office, "Let us have peace," has been happily realized ; the 
Union has been completely re-established on such principles of justice 
and equity as to insure its perpetuity ; the Constitution, with all its 
amendments, has been adhered to with rigid fidelity ; domestic tran- 
quility has been restored ; a spirit of humanity has been infused into 
our Indian policy ; the revenues of the country have been faithfully 
collected and honestly disbursed, so that, while the burdens of taxation 
have been materially lightened, the public debt has been largely reduced, 
and the national credit appreciably strengthened ; all branches of in- 
dustry have been stimulated to healthy activity ; and throughout the 
length and breadth of the land security, prosperity and happiness re- 
ward the perils and sacrifices by which the rebellion was suppressed 
and the Union preserved. 

It is an act of poetic justice that the soldier whose victories in war, 
and the statesman whose triumphs of peace have made the last decade 
the most glorious in the annals of American history, should receive an 
earnest of the gratitude of his countrymen by his re-election to the 
Presidency. 

It is an auspicious circumstance that the people are evidently awak- 
ening to a higher sense of the duties and responsibilities of public offi- 
cials. There is a general disposition to hold men entrusted with place 
and power to a strict accountability for their acts, and to demand that 
honesty and capability shall be the inflexible conditions of appointment 
to office. The recommendations of the president in favor of the prin- 
ciples enunciated in the report of the Civil Service Commission, were 
timely and apposite, and deserve universal endorsement. 

Numerous investigations have been set on foot during the present 
session of Congress, having for their object the discovery of corruption 
in the public service. Disaffected Republicans and partisan Democrats 
have made common cause in the endeavor to elicit evidence tending to 
show acts of wrong doing, and to implicate the President in knowledge 
or toleration of such acts. As in the days of Daniel, " they sought to 
find occasion against him." But, like the enemies of Daniel, "they could 
find none occasion nor fault, forasmucli as Tie was faithful, neither was there 
any error or fault found with him. " 

The more incisive the scrutiny, the more palpable the demonstration 
of his purity. The cost of pursuing these investigations has exceeded 
the aggregate loss incurred by the Government through the dishonesty 
of its subordinates since the administration came into power. 

A record so clear and honorable challenges the admiration, and com- 



322 grant's second term. 

pels the approval of citizens whose only cim is to secure a stable and 
beneficent Government— to preserve inviolate the faith of the nation — 
to give security to capital, adequate reward to labor, and equal rights 
to all. 

With the grievances of disappointed office seekers, the masses who 
thrive by their own toil, cannot be expected to find time or patience to 
sympathize. Whether this Senator has had more or that Senator 
i less than his share of patronage, are insignificant questions compared 
with the grave issues involved in a Presidential canvass. It is the consti- 
tutional prerogative of the President to make appointments to office. 
That he has not exercised these functions unwisely, the success of his 
administration abundantly proves. 

Believing that General Grant's civic career fitly supplements his mili- 
tary greatness, that he has brought to the discharge of his duties to the 
State the same energy, foresight and judgment which marked his 
achievements in the field, and made his campaigns from Donelson to 
Appomatox for ever illustrious ; and that he possesses and deserves 
the confidence of the American people, we pledge to him our united 
and hearty support as a candidate for re-election. 

RESOLUTIONS. 

Hon. E. Delafield Smith, Chairman of the Committee on Resolutions, 
presented the following : 

First. That the merchants and mechanics, the bankers and business 
men of New York, represented in this meeting and in the call under 
which it is assembled, are satisfied with the wisdom, ability, moderation 
and fidelity with which the national government is administered, and 
in common with the bulk of our brethren throughout the Union favor 
the continuance of its distinguished head in the office which he holds 
with usefulness and honor. 

Second. That the practical result of the coalition movement, if sue 
eessful, would be to restore the Democratic party to power. 

Third. That such a restoration, after the late glorious triumph over 
rebellion, would read in history like the record of a Tory resurrection 
at the close of our revolutionary war. 

Fourth. That Republicans elected to office mainly by those who as- 
sailed the Union at the South and at the North embarrassed its defend- 
ers, would inevitably become serviceable to the powers that sustain 
them, like those northern presidents who were chosen by the South and 
did its bidding better than its own statesmen. 

Fifth. That the patriotism that made Grant President of the Repub- 
lic he saved, is akin to that which placed Washington at the head of tho 
nation he created. The trust was accepted by each at a manifest sac- 
rifice of interest and inclination, with modest misgiving as to civii 
experience and qualification. But having been well and wisely admin- 
istered, the confidence implied in a re-election is an appropriate reward 



THE CHOICE OF THS "PI,AIN PEOPLE. " 823 

for faithfal services, and accords with the broadest views of public 
policy. 

Sixth. That against hostile criticisms and unfounded imputations, 
against alluring promises and prismatic theories,— we array the practi- 
cal reforms constantly inaugurated and the substantial results already 
achieved by the present administration. The chronic vices of existing 
systems, unfairly paraded to its injury, have been placed in a course of 
amelioration or removal. The reduction of the national debt has eli- 
cited the admiration of the world. Our diplomacy has made peace the 
ally of national honor. And our President has been in deed as in name 
a kind and "great father" to the Indian tribes still lingering within our 
borders. 

S&mth. That while honorable opposition is entitled to respect, every 
effor t to blacken, for political purposes, the character of President Grant, 
is a crime against truth which vindicates him, and an insult to the 
American people who honor and exalt him. Pure in private as irre- 
proachable in public life, with strong convictions yet deferential to the 
popular will, patient under attack, more ready to listen than to speak, 
with no display and no ostentation — those who know him best bear 
testimony to the sense, the sagacity, and the power of analysis by which 
his utterances are characterized and impressed. 

Eighth. That in the judgment of this meeting a majority of the peo- 
ple of the country expect, desire, and decree the re nomination and re- 
election of Ulysses S. Grant. 

SPEECH OF HON. E. DEIoAFIELD SMITH. 

Mr. B. Delafield Smith said :— Fellow Citizens : — It is manifest to us all 
that President Grant will be re-nominated at the Convention in Phila- 
delphia. It is equally clear that such is the wish of the American peo- 
ple. This is due to a confidence reposed in him by the " plain people " 
of the country, which no misrepresentation seems able to impair. His 
opponents assert that the public declarations in his favor are influenced 
by the office holders. But this cannot well be, for the office holders are 
always far outnumbered by the office seekers. With regard to executive 
patronage, it is a3 true now as when Talleyrand first said it, that every 
office conferred makes one ingrate and forty-nine enemies. The truth 
13, possession of the offices is a source, not of strength, but of actual 
weakness to any political party. In spite of this, General Grant is so 
strong and popular that a coalition is frantically sought as the only and 
forlorn hope of defeating him. It is thought that the Democratic mas 
ses can be carried over bodily to the few Republican seceders. But the 
moment the Democratic organization is relaxed, it will lose its hold upon 
thousands of its own members, and they may and will prefer in voting 
for a Republican to make the choice themselves, and they will rally in 
ifarge numbers to the hero of our patriotic armies. The coalition meei- 



324 GRANT'S SECOND TERM. 

ing, lately held in this city, recalls the old arrangement as to colored 
troops, where the officers were white men, but the rank and file negroes. 
So here, the platform was covered with Republicans, but the audience 
was made up of Democrats. In thus acting with their old opponents 
our disaffected friends boast of their independence, and impute servil- 
ity to us. But they are wrong. That man is most independent who is 
at once loyal to his country, true to his party, and faithful to his friends ! 
With these brief observations, I move the adoption of tlie address and 
resolutions. 

My only apology for inserting the above address and 
resolutions is, that I believe they constitute a valuable 
epitome of a very important chapter, yet to be more fully 
written, of the political history of the United States. 

A greater criterion of the success of the meeting, how- 
ever, was the editorial opinion of the Evening Post next day, 
which had been for a long time previously very bitter in its 
attacks upon General Grant. It said : 

" The meeting held last evening at the Cooper Institute 
was, we believe, without precedent in our political history. 
It was expressly called as a gathering of that branch of the 
Eepublican party which desires the nomination and re-elec- 
tion of President Grant. Yet, when it came together, the 
officers and speakers assumed that it was a mass meeting of 
the EepublicaDS of New York. This is to say, according to 
the organizers and promoters of this gathering, the one test 
of Eepublicanism now is the political support of one man's 
aspirations, and that before any nomination has been made 
by that party. This is a singular position to receive the 
approval, at least, by their acquiescence, of such men as 
some scores of those whose names are prominent in the 
report of the meeting, and who, as we know, would prefer 
some other candidate than General Grant, if they could 
hope to control the Philadelphia nomination. 

" The power of this meeting was wholly in its organization. 
The list of officers chosen by it is, on the whole, the best, 
most reputable, and most influential commanded by any 
partisan meeting within our recollection. There are a few 
names on it which disgrace their fellows ; there are many 
which carry no weight, but an unusually large proportion of 
the very long list are eminent and representative names in 
this city. The audience assembled was in many respects in 
keeping with the officers. It consisted mainly of reputable^ 
thoughtful voters." 



THE BUSINESS MEN INTERESTED. 325 

The good work was continued until November with the 
result that is now historical. 

The New York Sun said : " We believe that Henry Clews 
did more, in a pecuniary way, to promote the success of Grant, 
than any ^Republican millionaire of the Union League Club " 

Another mass meeting was held late in the fall. Refer- 
ring to it, and other events of that period, the President's 
Secretary writes a few days prior to the election as follows : 

Washington, D. C, Nov. 2, 1872. 
My Dear Clews : 

We are all greatly obliged for the documents and information which 
you have sent us during the campaign. The President says the list of 
vice-presidents of the last Cooper Institute meeting is the most remark- 
able list of prominent names he has ever seen upon one paper. It will 
of itself do great good. 

Our news is charming from all quarters, and all our hopes will, with- 
out doubt, be fully realized on Tuesday next. 

If the defeat of the enemy is overwhelming, it will be sufficient re- 
ward for all our labors. 

Your very truly, 

HORACE PORTER. 

To show still further the interest which the leading mer- 
chants, bankers and business men of this city took in the 
movement to re-elect General Grant at that time, the fol- 
lowing circular furnishes an excellent and historical record. 
It constitutes, in a small compass and compact form, a valu 
able chapter of financial history : 

CIRCULAR 

Of the Business Men of New York on the Financial Condition of the National 

Debt of the United States. Further Reduction October 1, 

10,327,000 Dollars. 

The undersigned, merchants, bankers and business men of New York, 
respectfully submit the following statements for the information of all 
parties interested therein : 

The Republican candidate for President of the United States is Gen. 
Ulysses S. Grant, who was unanimously named for re-election at Phila- 
delphia, in May last. 

At the commencement of Gen. Grant's first term of office, March 4, 
1869, the national debt was $2,525,000,000. On the first day of Septem- 
ber, of the present year, there had been paid and cancelled of the prin- 
cipal of this debt, $348,000,000, leaving a balance of principal remaining 



grant's second term. 



unpaid at that date, in accordance with the official statement of the 
Secretary of the Treasury, tlie sum of $2,177,000,000. 

Of this amount, $1,177,000,000 are represented in a funded debt, bear- 
ing interest in gold, while $400,000,000 remain unfunded in Treasury 
circulation. 

Up to the close of the last session of Congress, the annual red action 
of taxes, as measured by the rate3 of 1869, had been as follows : 

Internal revenue tax $82,000,000 

Inoome tax, (repealed,) 30,000,000 

Duties on imposts, 58,000,000 

Making a total reduction of $170,000,000 

The reduction of the yearly interest on the public debt exceeds the 
sum of $23,200,000, of which $21,743,000 are saved by the purchase and 
cancellation of the six per cent, public securities. 

A careful consideration of these results of a prudent and faithful ad- 
ministration of the national Treasury, induces the undersigned to ex- 
press the confident belief, that the general welfare of the country, the 
interests of its commerce and trade, and the consequent stability of its 
public securities, would be best promoted by the re-election of Gen* 
Grant to the office of President of the United States. 
New York, Oct. 4, 1872. 

PHELPS, DODGE Si CO., WILLIAM ORTON, 

GEORGE OPDYKE Si CO., ISAAC H. BAILEY, 

A. A. LOW & BROTHERS, SHEPHERD KNAPP, 

JOHN A. STEWART, WILLIAMS & GUTON, 

VERMILYE Si CO., EDWARDS PIERREPONT, 

JAY COOKE Si CO., RUSSELL SAGE, 

JOHN STEWARD, PETER COOPER, 

HARPER & BROTHERS, ANTHONY, HALL & CO., 

JOHN TAYLOR JOHNSTON, GARNER & CO., 

FREDERICK S. WINSTON, J. S. T. STRANAHAN, 

PEAKE, OPDYCKE Si CO., E. D. MORGAN Si CO., 

MORRIS FRANKLIN, DREXEL, MORGAN Si CO., 

SCHULTZ, SOTJTHWICK Si CO., AUGUSTINE SMITH. 

J. S. ROCKWELL Si CO., WM. H. VANDERBILT, 

ROBERT H. McCURDY, MORTON, BLISS & CO., 

WILLIAM M. VERMILYE, JONATHAN STURGES, 

R. W. HOWES, J. & W. SELIGMAN & CO., 

WILLIAM CULLEN BRYANT, J. & J. STUART & CO., 

C. L. TIFFANY. JOHN A. PARKER, 

SPOFFORD BROS. Si CO., BENJAMIN B. SHERMAN, 

J OHN C. GREEN, JOHN D. JONES, 

H. B. CLAFLIN & CO., J. D. VERMILYE, 

MOSES TAYLOR, SAMUEL T. SKIDMORE, 

WM. H. ASPINWALL, HENRY F. VAIL. 

ROBERT LENOX KENNEDY, LLOYD ASPINWALL, 

S. B. CHITTENDEN &i CO., JACOB A. OTTO, 

JAMES G. KING'S SONS, GEORGE W. T. LORD, 

HENRY E. PIERREPONT, SAMUEL McLEAN & 00, 3 

EMTTi SAUER, HENRY CLEWS &CO.,, 
BOOTH & EDGAR, 



CHAPTER XXXII. 

THE TWEED RING, AND THE COMMITTEE OF SEVENTY. 

The Eing Makes Itself Useful in Speculative Deals. — 
How Tweed and His " Heelers" Manipulated the 
Money Mabket. — The Ring: Conspires to Organize a 
Panic fob Political Purposes — The Plot to Gain 
a Democratic Victory Defeated and a Panic Averted 
Through President Grant and Secretary Boutwell, 
Who Were Apprised of the Danger by Wall Street 
Men. — How the Committee of "Seventy" Origin- 
ated.— The Taxpayers Terrorized by Boss Tweed 
and His Minions. — How " Slippery Dick " Got Him- 
self Whitewashed. — Offering the Office of City 
Chamberlain as a Bribe to Compeomise Matters. — 
How the Hon. Samuel Jones Tilden, as Counsel to 
the Committee, Obtained His Great Start in Life. 

THE Tweed Ring had considerable experience in and out 
of Wall Street for several years during the municipal 
reign of the famous Boss. I have made some reference to 
their attempts to manipulate the market through tight 
money, in my biographical sketch of that Wall Street ce- 
lebrity Henry N. Smith. 

The Eing was often highly subservient in assisting certain 
operators in speculative deals in stocks, one notable instance 
being in Hannibal & St. Jo. shares, which resulted in a terri- 
ble loss to Boss Tweed & Co. This stock became quite 
neglected for a long period afterwards, and so remained 
until the famous " corner " was engineered many years after 
by John E. Duff, of Boston, through his New York broker, 
W'm. J. Hutchinson, and by which poor Duff was almost, if 
not entirely, ruined. It is only justice to Mr. Duff, in this 
connection, to state that he was not to blame, as an exhaust- 
ive investigation by the Governing Committee of the Stock 
Exchange showed that his trouble chiefly arose through 



328 THE TWEED RING. 

flagrant dishonesty and betrayal of trust on the part of his 
agent, in whom he reposed too much confidence. 

Boss Tweed and his special retainers sometimes made 
"Wall Street instrumental in engineering national and State 
political movements. About the time of an election, if their 
opponents happened to be in power, the Ring would produce 
a stringency in the money market, by calling in simultan- 
eously all the city money, which was usually on temporary 
loans in the Street. 

This the Eing managers would accomplish through some 
of the banks which were the depositories of the city funds, 
and were under their control. 

By this means they worked up a feeling of antagonism 
against the Eepublicans who were in office, by throwing the 
blame on them, and thus rendering them odious in the eyes 
of those who had lost money in speculation. The blame was 
not unnaturally fastened on the party in power, and most 
men, when they lose money, are credulous enough to believe 
anything that seems to account for the manner in which the 
loss has been sustained. It seems to have a soothing effect 
upon their minds, and furnishes them with a tangible object 
upon which they may wreak their vengeance and feel satis- 
fied. There is nothing so irritating to the disappointed 
speculator as the harassing doubt of where to fix the blame. 

The Tweed Eing supplied this long-felt want, and filled 
the aching void in the heart of the man who happened to 
get on the wrong side of the market. When speculators fre- 
quently had their margins " wiped out," and were almost 
beggared of everything except their votes, they found that 
consolation which Wall Street refused them, in the sympa- 
thetic hearts of Tweed's u heelers," who pointed to the poor 
office-holders of the Eepublican party, representing them as 
the sole possessors of Pandora's box, which contained all 
evils that flesh is heir to. 

So these financial disasters were brought about by the 
Tweed party for the purpose of getting their friends into office, 



TWEED'S GANG ORGANIZE A PANIC. 



329 



which always paid tribute to the Boss when he was instru- 
mental in elevating a person to a fat position. He, himself, 
did not want any better office than receiver general of this 
tribute. 

In those days a Presidential election was largely influ- 
enced by the way Pennsylvania went, so that it had grown 
into a political maxim, "As goes the Keystone State so goes 
the Union." 

In the Spring of 1872, the year in which General Grant 
was the Kepublican candidate for the second term, when it 
was decided that Horace Greeley should be the Democratic 
candidate, great efforts were made to produce a panic in 
Wall Street. It was arranged by the Tweed party that 
the panic should take place simultaneously with the State 
election in Pennsylvania, so as to illustrate the evil results 
of Republican rule, and turn the influence in favor of Mr. 
Greeley's election. 

I received intimation of this politico-speculative conspir- 
acy, and communicated my information to Senator Conkling, 
who was stopping at the Fifth Avenue Hotel at the time. I 
told him that the Democrats were working up a panic to 
help to defeat General Grant. He said it was the first he 
had heard of it, but it was so like a move that Tweed and 
his party would make, that he felt there was just cause for 
alarm about it, and he requested me to go and see Governor 
Morgan, and also George Opdyke, on the subject. I found 
that the Governor was at a church meeting, and I left my 
card telling him to call upon me at the rooms of the Repub- 
lican National Committee, as I wanted to see him upon 
important business. I left word for Mr. Opdyke to call 
also. 

The Governor soon presented himself at the Committee 
rooms, and I divulged to him my information and suspi- 
cions. He did not exhibit so much interest as I imagined 
the importance of the case demanded, and he appeared to 
doubt the correctness of the report of the political inten- 



330 THE TWEED RING. 

tions of the Tweed Eing, or rather he seemed to imagine 
that the King was hardly capable of a move that involved 
such subtlety and depth of design. Therein he greatly 
underestimated the power, resources and statecraft of Peter 
" Brains " Sweeney. The Governor was of a phlegmatic 
temperament, and it was difficult to convince him of any- 
thing that was not very clearly demonstrable. I told him 
that my information was of such a positive and reliable na- 
ture that I knew I was right, and that if there should be a 
panic in Wall Street I had serious apprehensions that it 
would prove disastrous to the Republicans in the national 
campaign. 

Governor Morgan appointed a meeting for the next day 
to discuss the matter more fully and obtain further light 
upon the subject. I took with me to see the Governor, whom 
I had now convinced of the reality of the political plot, Mr. 
George Opdyke and Mr. H. B. Claflin. 

In the meantime the Governor had seen Travers, who, 
being an inveterate bear on the situation, had an inkling of 
what was in progress to break the market. The Governor 
had satisfied himself that my representations were correct, 
and that trouble was really brewing. Ho then entered with 
earnestness into the question of the best policy to be adopt- 
ed to obstruct the schemes, and frustrate the purposes of 
the Democratic party. 

I then suggested, that as the matter did not admit of delay, 
it was highly essential that some one, or more, of us should 
go to Washington to see General Grant. The Governor 
said he could not go. I could not go, and neither could 
Mr. Claflin. So Mr. Opdyke, who was very ready in such 
matters, consented to bear the important message in person, 
provided we all agreed to back him up by writing a strong 
letter to the President, setting forth the facts in relation to 
the emergency. This we did, and Mr. Opdyke left at once 
for Washington, This was on Friday evening, and he trans- 
acted his business with more than ordinary despatch, and 



THE TIGHT MONEY CONSPIRACY DEFEATED. 331 

returned on Sunday morning. He sent for me, and told 
me that he had explained the matter to the President, who 
felt exceedingly grateful for the warning which he and our 
letters had conveyed, and that he had forthwith consulted 
with the Secretary of the Treasury, and it was resolved to 
order the purchase, on Monday, of ten millions of bonds, and 
the sale of ten millions of gold, for the purpose of averting, 
in advance, any financial disturbance that might arise 
through the project of the Tweed King to create an artificial 
stringency in the money market. 

Then I saw that these men who were engaged in the con- 
spiracy to create a panic, and benefit themselves both politic- 
ally and financially by its results, were a deeply designing lot, 
and that under the law, gold could be bid up, the highest bid- 
ders obtaining it, having the option of either paying by de- 
positing their money in payment for it in the National depos- 
itories, which were the Fourth National Bank and the Bank 
of Commerce, or else depositing it in the Sub-Treasury. 
If deposited in the latter it would be locked up, and the 
effect intended by the Treasury, to make money easy, would 
be neutralized, in so far as the influence of the money as a 
circulating medium was concerned. 

In order, therefore, to provide for that probable contin- 
gency, my firm subscribed for the whole ten millions of gold* 
the names being the clerks of my office. We were awarded 
eight millions, and we paid the money into the Bank of 
Commerce, and the Fourth National Bank, through which it 
was brought into circulation. 

Thus ten millions of greenbacks and also ten millions of 
gold came fresh from the Sub-Treasury into circulation im- 
mediately, promptly anticipating and defeating the machin- 
ations of the King. 

The Tweed King being " all broke up " on this deal, the 
effect was magical on the market. The plans of the con- 
spirators had been entirely upset, and the Pennsylvania 
election took place a few days afterward with an overwhelm- 
ing majority for the Republicans. 



832 THE TWEED RING. 

Had the panic, which was projected by the Eing, taken 
place, the result might have been otherwise, and the re- 
election of Grant thus jeopardized. 

After this triumph over Tweed and his gang, I set my wits 
to work to plan their overthrow. I saw that their power was 
entirely money power, obtained by official position through 
official theft. I was satisfied that these patriots who had 
put their hands up to the elbows in the City Treasury of 
New York were bent upon buying, stealing or otherwise 
obtaining their way to the National Treasury at Wash- 
ington. 

They had hoped to do there on a large scale what they had 
accomplished on a smaller scale in the city of New York, 
where they were becoming restive under their limited 
resources. 

It was with the view of suppressing the dangerous aspira- 
tions of this band of political marauders that I originated 
the well known Vigilance Committee of Seventy, and at the 
first meeting to organize this committee I nominated sixty- 
five of its members. 

The committee was thus backed at the start by so many 
prominent citizens as to make it at once a power in the 
community. 

Then for the first time in many years the citizens of New 
York were emboldened to become outspoken on the subject 
of political plunder and tyranny, and against the officials 
who had ruled the city with a rod of iron. 

For a long time previous to this there had been grave 
suspicions that robbery on a large scale was being perpe- 
trated, but no one dared to give utterance to the fact except 
with bated breath and in half smothered whispers. No one, 
with the possible exception of a few who were not taxpayers, 
had the temerity to open his mouth to say a word against 
the desperate men who controlled the destinies of the city, 
through fear that on the event of any remark reaching the 
ears of the Boss or his minions, the property of the person 



slippery dick's whitewashing scheme. 333 

thus offending should be marked up to an artificial value and 
his taxes accordingly increased. This was one of the most 
effective methods pursued by the Eing to choke off unfriendly 
criticism by the rich men of the city. In this way the 
power of some of the most influential citizens became 
paralyzed, being held in complete subjection under the 
terrorism of this subtle system of blackmailing. 

The power the Eing possessed of covering up the rascality 
of its members and bamboozling the public is hardly con- 
ceivable at this day except by those who had experience of 
it at the time. As an instance of this I may state that some 
time prior to the appointment of the Committee of Seventy 
certain accusations were ventilated against Eichard Con- 
nolly, the City Comptroller. He put on a bold front, and 
insisted upon an investigation of his department by a com- 
mittee of leading and prominent citizens. He named his 
committee, who were Moses Taylor, Marshall Eoberts and 
John Jacob Astor. These were men against whom no 
person could have any objection. They were wealthy and 
independent citizens, and it might have been difficult at the 
time to have selected any other three who commanded 
greater confidence in the community. The investiga- 
tion, through the unblushing effrontery and audaciousness 
of Connolly and his "pals," resulted in an acquittal of Mr. 
Connolly, which gave him a new lease of political life, and 
rendered it more dangerous than ever for any one to utter a 
word of hostile criticism against his methods of managing 
the city finances. 

Eesults showed, when the Eing was exposed, that Connolly 
had made the very best use of this investigation in appro- 
priating additional sums out of the City Treasury. 

The Eing was now supreme in city affairs, and the city 
was under a reign of terror. This state of things existed 
until the summer of 1872, when the Committee of Seventy got 
into harness, after which the despotic thieves that had ruled 
the roast so long, were driven from power one after another 



334 THE TWEED RING. 

in rapid succession, and scattered to the four corners of the 
globe. 

The task of ousting this brazen band of plunderers, root 
and branch, was attended with considerable difficulty, as 
their resources were so numerous and powerful. When they 
were no longer able to exercise their arbitrary power they 
stooped to every form of cajolery and bribery in order to 
adhere to the remnant of their official authority. As an illus- 
tration of this, I may state that at the beginning of my ef- 
forts in connection with the Committee of Seventy I was 
waited upon by a member of the King and asked if I would 
not accept the position of City Chamberlain. I said: 
" That is a matter, of course, which I could not decide upon 
at once, as there is no vacancy at present. It will be time 
enough for me to consider the matter when a vacancy occurs, 
and then when the position is offered to me." 

This answer carried with it an intimation, which I had 
intended, with a view of drawing out some of the internal 
methods of procedure in such cases, that I would probably 
accept the position and help to smooth over impending reve- 
lations. I thought that the end which the Committee had in 
view justified this means of mildly extorting an important 
secret in methods of King management, that was calculated 
to aid us in the work of municipal reform. 

Next day I was again waited upon by one of Tweed's 
most trusty friends, who graciously informed me that the 
City Chamberlain had resigned, and that there was a vacancy 
which I could fill to the entire satisfaction of the then ap- 
pointing power. I desired him to convey my feelings of 
deep gratitude to the powers that were then on the point of 
being dethroned, and to say that I very respectfully de- 
clined the flattering offer. I said that I had thought earn- 
estly over the matter since the previous day, and as I was a 
member of the Committee of Seventy, which was a reform- 
ing organization, I felt that I could not conscientiously ac- 
cept the position. 



OFFICIAL FI«Y TO PARTS UNKNOWN. 335 

It was necessary that the office should be filled immediately, 
and it was next offered to Mr. F. A. Palmer, President of the 
Broadway Bank, which had been one of the Bang's deposito- 
ries of the city funds. 

Soon after this the majority of the city officials had re- 
signed and taken their flight to parts unknown. They were 
scattered broadcast over the world. Some had gone to 
Europe, some to Cuba, and others to that favorite and 
paradisaical colony of defaulters, the New Dominion, leav- 
ing the Committee of Seventy, as a reform and revolutionary 
body, in complete control of the city. 

Tweed remained, but was not quite so audacious in 
putting his pet interrogative, " What are you going to do 
about it f He seemed to be convinced that the Committee 
of Seventy meant business. Mayor Oakey Hall also re- 
mained, and facetiously protested that as far as he was 
concerned everything was " O. K." 

The Hon. SamuelJ. Tilden began to loom into prominence 
about this time. Through the influence of William F. Have- 
meyer, he was chosen one of the three legal advisers of the 
committee. Abraham B. Lawrence and Wm. Ho Peckham 
were the other two. Mr. Tilden was quick to seize this 
opportunity of sudden prominence to bring himself to the 
front and pose as a great reformer. Had it not been foi 
the Committee of Seventy, I believe it is very doubtful 
whether this great reformer would ever have been known as 
such, and it is also exceedingly problematical v/hether he 
would have ever got the chance of being counted out, or,, 
attempting through the magic of his occult cyphers, to count 
anybody else out of the Presidency of the United States, 




SAMUEL JONES TILDEN. 



CHAPTER XXXIII. 

HON. SAMUEL J. TILDEN. 

HOW TlLDEN BEGAN TO MAKE HIS FORTUNE IN CONNECTION 

with William H. Havemeyer. — Tilden's Great Fori 1 
in Politics. — He Improves his Opportunity with 
the Discernment of Genius. — How Tilden became 
one of the Counsel of the " Committee of Seventy." 
— His Political Elevation and Fame dating from 
this Lucky Event. — The Sage of Greystone a Truly 
Great Man.— Attains Marvelous Success by His 
own Industry and Brain Power. — He not only De- 
served Success and Kespect, but Commanded them. 
How his Large Generosity was Manifested in His 
Last Will and Testament. — The Attempt to Break 
that Precious Public Document. 

MR WM. H. HAVEMEYER had long been associated 
with Mr. Tilden in railroad wrecking and the reorgani- 
zation of broken concerns of this character. Through this 
process both these gentlemen became wealthy. When, 
therefore, Mr. Havemeyer extended the right hand of 
fellowship to his confidential companion in money mak- 
ing affairs, and invited him to officiate as one of the 
counsel of three for the Committee of Seventy, Mr. 
Tilden was sharp enough to appreciate the opportunity, 
which he seized with avidity. 

He was quick to discern the tide in the affairs of men 
which, when taken at the flood, leads on to fortune. He 
did not wait until the tide began to ebb, but, like an able 
seaman, set his sail at the propitious moment to catch the 
prosperous breeze as well as the tide. Thus, through a 
lucky chance and other men's exertions, Mr. Tilden was 
raised high on the very crest of the tidal wave of reform, 
almost before he knew it. 

In the first instance, this happy accident of being one of 
the trinity of legal advisers to our committee, for which ha 



338 HON. SAMUEL J. TII.DEN. 

was well paid, did not lead immediately so much to fortune 
as to fame, but it formed an important portion of the 
pedestal upon which the several millions which he so muni- 
ficently bequeathed to educational purposes were subse- 
quently raised. To fame he was then comparatively 
unknown. The Committee of Seventy enabled him to 
obtain the start which was chiefly instrumental in elevating 
him to a position of renown in national politics. 

Tilden's great forte in politics, as in financial affairs and 
railroad matters, was to set a cash value on everything, and 
measure it accordingly. If he opened his "barrel" the 
contents were not distributed indiscriminately, but on the 
principle directed by the most expert judgment of where 
the money would do the most good — according to Mr. 
Tilden's ideas of good. "What they were I don't attempt to 
explain, but, like the popular novelist, charitably leave them 
to the inference of the reader, or to that expert Moses who 
so ably deciphered occult telegrams from Florida and 
Louisiana when there was such a close contest for the ofilce 
of National Executive. 

Without departing from the main issue of my subject, 
however, I may say that the position which Mr. Tilden was 
enabled to assume as counsellor to our committee made it 
possible for him to rise from the, not to say dignified, al- 
though money -making, attitude of railroad wrecker to that 
of Governor of the Empire State of the Union, thus paving 
the way for him to become almost a successful candidate" 
for the highest position in the gift of the Great Eepublic. 

Such a sudden transition from comparative obscurity was 
enough to turn any ordinary head. 

Seeing the unexpected course that both our local 
and national history have taken, it is impossible to say what 
might have been the course of this man's destiny, and the 
fate of this new Daniel come to judgment in canal ring 
matters, had it not been that his friend Havemeyer dis- 
covered him at an opportune moment, and rescued him from 
manifest oblivion in the nick of time. 



THE POWER OF THE COMMITTEE OF SEVENTY. 339 

It must be said, on behalf of Mr. Tilden, however, that 
he improved the occasion with the discernment of genius, 
and in the fullest degree, and to the highest extent, thor- 
oughly justified Havemeyer' s choice. 

The soundness of that proverbial philosophy which 
holds that lightning never strikes twice in the same place 
seems to have been fully appreciated by Mr. Havemeyer, al- 
though this was a little ahead of the time that John Tyndall 
and other scientists of the modern school of discovery had 
demonstrated some of the recent wonders of electricity. 

Tilden struck while the iron was hot, and though he failed 
to reach the highest pinnacle of his soaring ambition, he 
demonstrated the wonderful possibilities which lie in the 
path of obscure men who are blest with friends who look 
out for their welfare, and who have the precaution to turn 
the wheel of fortune in the right direction. 

Whether it was the result of fate, genius, or wise direc- 
tion, or a combination of all these attributes, I don't pretend 
to decide, but I have noted the simple facts from my own 
observation and experience, associated with the rise and 
financial progress of the Hon. Samuel J. Tilden, leaving 
others deeper in scientific and philosophic matters to 
supply the details and hidden mysteries of the causes of 
his marvellous prosperity. 

The Committee of Seventy, when entering upon its labors, 
passed a resolution authorizing the appointment of a sub- 
committee by the chair to select and retain three lawyers 
to represent it in the matters of litigation that might arise 
in connection with the investigation. Mr. Havemeyer, be- 
ing a member of the sub-committee, through his influence 
Samuel J. Tilden was one of the three appointed. 

To give the reader an idea of the power and prestige of 
the Committee of Seventy at that time it is only necessary 
to state that it was instrumental in making Mr. Abraham 
JLawrence one 01 the Judges of the Supreme Court, and Mr. 
W. H. Peckham, the third counsel, could have obtained al- 
most any judgeship he had desired, with perfect facility. 



340 HON. SAMUEL J. TII.DEN. 

These cases are on official record, and are living examples 
to show that I am not exaggerating. Judge Lawrence still 
adorns the bench, with an excellent record behind him, and 
Mr. Peckham has been a prominent figure in many of the 
most important suits that have become historic in the State 
and City of New York. 

Mr. Tilden saw the power which this committee, used as 
an instrument of recommendation, wielded, and he set his 
astute mind to avail himself of the reformatory advantages 
which it afforded. The committee was a reform body, and 
he saw his opportunity, as one of its counsel, to become a 
reformer also. He builded almost better than he knew, if I 
may be permitted to quote Scripture in this case, and he did 
not build on a sandy foundation either. He planted him- 
self on the solid rock of reform principles, independent of 
politics or previous condition. It must be said, to his credit, 
that he used the material at his disposal with great tact and 
good judgment, and made an excellent reformer. 

Whatever may have been said about him by political op- 
ponents, the late Sage of Greystone must be judged in this 
sinful world by the positions to which he honorably at- 
tained. He became a prominent and most estimable citizen 
of our great Eepublic, and had it not been for his age, 
and certain physical infirmities, the existence of which was 
a matter of dispute, he would have made a very good Presi- 
dent, judging from his record as a Governor. 

I have not intended to say anything especially disparag- 
ing or ill-natured about Mr. Tilden through any hostile 
feeling towards him, of which I never had any. My inten- 
tion has been simply to show how easily a man can rise if 
he has the ability required to take passage on the tide of 
prosperity exactly at its flow, the magic point of embarka- 
tion which William Shakespeare has suggested. 

So what I have stated about Mr. Tilden is in the main 
rather to his credit than otherwise. 

For a man who attained such an elevated position of 



TURNING THE CURRENT OF HIS DESTINY. 54 1' 

success by his own industry and brain power I have the 
highest respect and the deepest sympathy, knowing myself 
a good deal about the toil attendant upon climbing above 
the heads of the great majority of the lC masses " with a 
strong contingent of the envious "classes" always using 
their best efforts to pull a man down who attempts to aspire 
above a certain level. In fact, Mr. Tilden not only deserved 
success and respect, but he commanded them. Such a man 
should always be accorded most graciously his well-earned 
deserts. 

I can, therefore, conscientiously subscribe myself one of 
the great admirers of his successful career on the whole, 
bearing always in mind that human nature is not perfect, 
and that there are few, if any, who have not had some 
murky clouds cast over their fair fame. 

Although on strict moral principles we should never do 
evil that good may come, yet the manner in which Tilden 
disposed of the greater portion of his fortune will, even in 
the eyes of straight-laced moralists, go far to cover a multi- 
tude of sins in the acquisition of his wealth. There are 
probably few, if any, churches in the land that would have 
refused a portion of the bequest, no matter how familiar 
their members or their clergy might have been with Mr. 
Tilden's railroad methods. 

In this imperfect sketch of the turning point of prosperity 
in Mr. Tilden's career, I have desired to show how little it 
requires to change the entire current of a man's apparent 
destiny. A man who attains such eminent success has his 
Creator to thank for endowing him in the first instance with 
the capacity to take advantage of the chances thrown in his 
way, and his own smartness for turning them to the best 
account. 

I have taken Mr. Tilden up and devoted to his extraor- 
dinary career a few pages, from personal reminiscences, in 
this book, owing to the fact that he was identified with a 
number of railroads in the way which I have indicated 



342 



HON. SAMUEI, J. TILDKN. 



above. His position in this respect naturally classifies bim 
with some of our most prominent Wall Street speculators, 
investors and operators, and he thus naturally falls within 
the scope of the main subject of this book. 

Mr. Tilden, in his will, ordered that if the will should be 
contested by any of the beneficiaries each and all of the 
contesting parties should be disinherited. 

In spite of this prohibition, George H. and Samuel J. 
Tilden, sons of Henry A. Tilden, and nephews of the testa- 
tor, contested the validity of the instrument, not on the 
ground of incapacity or undue influence, but upon construc- 
tion. 

Henry L. Clinton and Aaron Yanderpoel were the lawyers 
for the contestants. 

It is curious that the will of a man so deeply learned in 
the law as Mr. Tilden was, should be questioned as to 
whether it was a legal document or not. But such was the 
ground of the contest. The point was this : The residu- 
ary clause empowers the trustees to apply to the Legislature 
for an act to incorporate a body to be called the Tilden 
Trust. This body, when incorporated, was to become the 
legatee. This method of procedure, according to the 
opinion of learned counsel in the law, bequeathed to the 
trustee under the will the power to name the public legatee 
of the testator. It seems that a testator has no power to do 
this, according to the recent decisions of the Courts of last 
resort in this country, which, it would seem, Mr. Tilden had 
not read. Nobody but the testator himself has power to 
name the legatee. It appears he had the decision of the 
English Court in his mind, which allows of this method of 
bequeathing property. Following is the residuary clause in 
full, bearing upon this point : u I request my said execu- 
tors and trustees to obtain, as speedily as possible, from the 
Legislature an act of incorporation of an institution to be 
known as the Tilden Trust, with capacity to establish and 
maintain a free library and reading-room in the city of New 



TRYING TO BREAK HIS WILL- 313 

fork, and to promote such scientific and educational objects 
as my said executors and trustees may more particularly des- 
ignate. Such corporation shall have not less than five 
trustees, with power to fill vacancies in their number, and in 
case said institution shall be incorporated in a form and 
manner satisfactory to my said executors and trustees dur- 
ing the lifetime of the survivor of the two lives in being, 
upon which the trust of my general estate herein created is 
limited, to wit, the lives of Ruby S. Tilden and Susie Whit- 
tlesey, I hereby authorize my said executors and trustees to 
organize the said corporation, designate the first trustees 
thereof, and to convey to or apply to the use of the same 
the rest, residue and remainder of all my real and personal 
estate not specifically disposed of by this instrument, or so 
much thereof as they may deem expedient, but subject, 
nevertheless, to the special trusts herein directed to be con- 
stituted for particular persons, and to the obligations to 
make and keep good the said special trusts, provided that 
the said corporation shall be authorized by law to assume 
such obligation. But in case such institution shall not be so 
incorporated during the lifetime of the survivors of the said 
Euby S. Tilden and Susie Whittlesey, or if for any cause or 
reason my said executors shall deem it expedient to con- 
vey said rest, residue and remainder, or any part thereof, or 
to apply the same, or any part thereof, to the said institu- 
tion, I authorize my said executors and trustees to apply the 
rest, residue and remainder of my property, real and per- 
sonal, after making good the said special trusts herein 
directed to be constituted, or such portion thereof as they 
may not deem it expedient to apply to its use to such chari- 
table, educational and scientific purposes, as in the judgment 
of my said executors and trustees will render the said rest, 
residue and remainder of my property most widely and sub* 
stantially beneficial to the interests of mankind." 




^ ^C^QeJtc^— 



CHAPTEB XXXIV 

COMMODORE VANDERBILT.— HOW HIS MAMMOTH FOR- 
TUNE WAS ACCUMULATED. 

Feerym an.— Steamboat Owner.— Euns a Great Commer- 
cial Fleet. — The First and Greatest op Eailroad 
Kings. — The Harlem " Corner." — Keorganization of 
N. Y. Central. — How He Milked His Co-speculators. 
— His Fortune. — Its Vast Increase by Wm. H. 

THE most conspicuous man connected with Wall Street 
in mj early days of speculation was c ' Commodore" 
Tanderbilt. "Without going minutely into the early ex- 
ploits of the man, it will be sufficient, for the purposes of 
this narrative, that I trace his start in life in connection with 
a row-boat of which he was Captain, plying between Staten 
Island, Governor's Island, and New York, in which he him- 
self did the rowing. This enterprise, in course of time, 
grew into one with boats propelled by steam, instead of 
manual labor. During his progress as ferryman he became 
proprietor of a hotel at New Brunswick, New Jersey. Thi3 
side issue did not prove very lucrative, perhaps, because 
the Commodore, with all his versatile ability, did not pos- 
sess the special talents required to keep a hotel. The hotel 
still exists, and is situated near the railroad station, and is 
now, as it was then, merely a railroad tavern. The first 
vivid recollection of the Commodore in Wall Street " dick- 
ering" was in connection with the Nicaragua Transit Com- 
pany, the capital of which was over $4,000,000. He be- 
came President of the Company, and soon afterward the head 
and front of the whole enterprise. The Directors and stock- 
holders, and in fact every one else connected with the Com - 
pany, were soon crushed into nonentities. When their 
complete subjection was obtained, the Commodore loomed 
up into gigantic dimensions, and, as he expanded^ the 



316 COMMODORE VANDERBH.T. 

Nicaragua Company became small by degrees and beauti- 
fully less in inverse proportion. Eventually the greatly 
depressed stockholders, like the worm when trodden under 
foot, turned and showed resentment. The case came into 
Court and was the subject of ordinary investigation, but I 
never heard of the Company recovering anything. I pre- 
sume their claims were relegated to the profit and loss 
account in perpetuity. 

After this, the Commodore started a line of steamers in 
opposition to the fleet of Pacific Mail, and kept his boats 
running until he was bought off. About this time an event 
happened which has preserved for posterity a good story, 
highly characteristic of the Commodore. His son-in-law, 
James M. Cross, had conceived the idea of embarking in 
the wholesale leather business in the "Swamp." He had 
been talked into it by an experienced man who was to be 
his partner. A store was secured, and everthing put under 
way for the start, with the exception of the capital, which Mr. 
Cross had agreed to contribute against the experience of 
his partner. The amount was to be $50,000. Mr. Cross, 
knowing that the Commodore had at this time become 
rich and prosperous, felt satisfied that it was only nec- 
essary to make application to his enterprising father- 
in law for the amount required. Thereupon, with the 
confidence begotten of implicit trust, he approached the 
Commodore for this temporary accommodation, giving 
him a full description of the nature of the business. 
After listening attentively to the statement of his es- 
teemed son-in-law, the Commodore said in reply: "Now, 
James, if I let you have this $50,000 to put in the leather 
business, how much do you think you will be able to 
make for your share out of the profits % " Mr. Cross thought 
the best position to take with a rigid business man like his 
father in-law was to be prudently conservative in his expec- 
tations, and to keep all his Colonel Seller prospects in the 
background. After a few moments reflection he replied : " I 



VANDERBII/T AND GARRISON. 317 

believe I am almost certain to make $5,000 a year." The 
Commodore promptly responded : "James, as I can do bet- 
ter than that myself in handling $50,000, 1 will give you 
$5,000 a year hereafter, and you may consider yourself in 
my employ at that salary." There was no way for James to 
wriggle out of it, and he accepted the situation with appar- 
ent good grace, whatever his internal emotions may have 
been at the time. The Commodore forthwith dispatched Mr. 
Cross to San Francisco to manage his steamboat business 
there. He soon discovered, however, that James was hardly 
aggressive enough for the go-ahead fellows on the gold 
coast, and he was recalled. After looking around some time 
for a man possessing the necessary requirements to be placed 
in successful competition with the adventurous spirits of the 
Pacific Slope, his search was rewarded by an introduction to 
Commodore C. K. Garrison, then in command of a Missis- 
sippi steamboat. Garrison had established his reputation 
for being the best euchre player on the river, and for much 
besides which that term implies. He was brave and fearless — 
in fact, in some respects, a Jim Bludso of real life, with the 
self-sacrificing qualities of that hero largely discounted, 
or perhaps entirely left out. It required men of mettle 
in those days to run a steamboat on the Father of Waters, 
when the greater portion of the passengers belonged to the 
gambling fraternity, and were all experts with the bowie 
knife and the ready revolver. 

The Commodore had an interview with Garrison, which 
resulted in an engagement, and he was sent to San Francisco 
as the Commodore's agent. It was soon found that he was 
the man for the Wild West, and he was not slow to appreci- 
ate his own value and importance to the increasing fortunes 
of his employer. He struck very often for higher wages, 
and was always able to command his price. He rose, from 
one advance to another, until his salary at that day had 
reached the marvellous figure of $60,000 a year. Numerous 
stcries of Garrison's fabulous prosperity on the Pacific 



348 COMMODORE VANDERBII/T. 

Coast reached this city and the ears of the Commodore, and 
his fame began to penetrate farther than the name of the 
latter had ever been heard. These accounts had their effect 
on a mind so naturally envious as that of the Commodore. 
He began to realize the humiliating fact that, instead of 
Garrison being in. his employ, the former captain of the 
Mississippi steamboat had him in tow, and was everywhere 
regarded as the Boss, while Yanderbilt was simply supposed 
to be his Eastern agent. This brought matters to the point 
where patience ceased to be a virtue, and the connection was 
severed. Soon after this the Commodore sold out to the 
Pacific Mail Company, which again became a monopoly, and 
as the fight had been a losing one to him, he was obliged to 
find other waters for his boats. 

Since his advent with a common row boat on the 
waters of our own handsome bay, thence through the 
gradations of ferry boats and steamboats, nothing but 
unremitting success had attended his ventures, until his 
unequal struggle in competition with Pacific Mail. He 
appeared to have met his Trafalgar when he encountered 
that fleet. His dissociation with Garrison seemed for a 
time to forebode disaster. He gathered himself up tem- 
porarily again, but never took to the waters so kindly after- 
wards. He began to feel that his financial destiny was verg- 
ing towards a firmer foundation. His last boat was the fam- 
ous steamship Yanderbilt, which was recognized at the time 
as one of the finest ships to be found on any sea. He made 
a present of her to the Government during our great Na- 
tional struggle, or according to another account, he lent her, 
and the Government kept her. The Commodore at one 
time had a fleet of sixty ships. 

The Commodore became convinced that the growing pros- 
pects of railroads pointed to greater facilities for transpor- 
tation in the future, and also a more profitable investment 
than those watery regions which had hitherto appeared to 
be his natural element. He promptly resolved to turn his 



THE " CORNER" IN HARLEM. 349 

back on the domain of Neptune, and to devote his great ener- 
gies to enterprises on land. He saw there was compara- 
tively little room for development in water traffic, while in 
the railroad business the field was practically unlimited. 

He then commenced to buy up Harlem Eailroad stock, so 
as to obtain control of that road, and in the operation got 
up the celebrated Harlem " corner." Application had been 
made to the Legislature for some advantages in connection 
with the road, which were refused for reasons best known 
to leading members of that body. In the meantime Harlem 
stock had been knocked down to a very low figure. The 
Commodore remained in ambush, and was secretly purchas- 
ing it. He then went to the Legislature to get his bill 
passed. Most of the members of the Legislature thought 
they had got the u deadwood" on the Commodore, and 
enlisted a large number of their friends in the enterprise. 
They attempted " to work the Commodore for all he was 
worth," and for a time appeared anxious to pass the 
measure required. On the strength of this anticipated 
action on the part of the Legislature the stock advanced, 
when the members sold "short" and failed to legislate. 
The stock naturally went down, and Yanderbilt bought it 
up. The collapse anticipated by the Legislature did not take 
place, and, instead of that, the Commodore got a " corner" in 
the stock, and the members of the Legislature were the parties 
mulcted. They had, therefore, all to go to the Commodore's 
office, and settle up with him on his own terms, and he 
made arrangements to get his measure in favor of the road 
through the Legislature as part of the bargain. This trans- 
action is more fully described in another chapter. 

His next great enterprise was in connection with the New 
York Central. Having successfully euchred the legislators 
in the matter of Harlem, he was encouraged to play a still 
higher game. As soon as he obtained control of this prop- 
erty, it seemed as if it had been touched by a magic wand, 
or that famous stone of Midas, contact with which turned 



850 COMMODORE VANDERBII/T. 

everything into gold. Prior to this event the road had 
been dragged along under the management of Dean Rich- 
mond, Samuel Sloan and Henry Keep, without any signs of 
prosperity ; but when Vanderbilt took hold of it there was 
a sudden change to visible progress and prosperity. It 
never looked behind afterwards, and both enterprises have 
enjoyed signal and increasing success ever since, thus illus- 
trating the marvellous capacity of the Commodore for the 
organization and management of large enterprises. The 
hydraulic operations of the Commodore with the stock of 
this property would alone furnish material for a very inter- 
esting chapter. Sending it up on one occasion at a bound, 
between Saturday and Monday, 20 per cent., was a new move 
in manipulation which caused some of the boldest operators 
on the Stock Exchange to stand aghast. He kept working 
the stock up and down, in some such way as Mr. S. Y. White 
now keeps toying with Lackawanna, until he " milked " the 
street sometimes very dry. He kept the tempting prize of a 
coming dividend glittering before the eyes of the dazzled 
imaginations of his friends who were dealing in the stock, 
but the fc£ milking " process was so ably managed that, when 
the famous 80 per cent, dividend was actually declared, they 
had become so poor that they were unable to carry any of the 
stock, so as to avail themselves of the profits. There was 
but one man that I know of who reaped any benefit from it, 
and that was an old friend of the Commodore, who still 
lives, and who had met with signal reverses in some of the 
Erie deals at the time Mr. Gould so ably managed that con- 
cern. This man had been wiped out in Erie, and his de- 
pressed condition awoke a sympathetic cord momentarily in 
the heart of the Commodore. He gave his friend the tip 
the day before the dividend was declared, and he found 
another friend who bought enough of stock to realize $700,- 
000, which was divided between them. This is the solitary 
exception within my knowledge where the Commodore failed 
to bag the entire game without " saying turkey once " to any 
person connected with the deal. 



RELATIVE SUCCESS OF FATHER AND SON. 351 

The life of the Commodore affords singular scope for re- 
flection on the immense possibility of a great business 
capacity to amass a large fortune in a few years, especially 
in this country. The Commodore and his son William H., 
in a little more than half a century, accumulated the largest 
private fortune in the world, excepting the aggregate wealth 
of all the Rothschilds combined, which has been the result of 
the most expert financiering in all the capitals of Europe, 
through several generations, with all the resources of the) 
greatest monarchs on the earth to back their various enter- 
prises. With all these advantages in favor of the Eothschilds, 
the Yanderbilt fortune amounts to two- thirds of the sum 
total of theirs. The result is certainly astounding when sub- 
mitted to a test of the highest standard of comparison that 
can be found anywhere on this globe. But, wonderful as 
the success of the Commodore was in its rapid gradations, 
from the possession of a rowboat on our bay to that of a 
fleet of sixty-six steamboats that brought mercantile argosies 
from all parts of the world, and in later years his great rail- 
road acquisitions, yet the success of his son is more marvel- 
lous still. 

In seventy years the Commodore arose from nothing 
financially to be the proud possessor of $90,000,000. Wm. 
H. obtained $75,000,000 of that and nearly trebled it in a 
tenth part of the time. He made three times as much in 
seven years as his father made in seventy, or he made 
as much on an average every two and one-half years as his 
father had done during the three score and ten of his active 
business and speculative career. It any person having the 
necessary amount of temerity had ever ventured to make 
such a prediction as this in the presence of the old Com- 
modore, what a natural born idiot he would have been re- 
regarded by that grand old man. If the spirits of the de- 
parted ever visited the glimpses of the moon in these days, 
what a profound sense of humiliation that of old Vander- 
bilt must feel, as it makes its nightly rounds through those 



352 COMMODORE VANDERBILT. 

spacious marble corridors in Fifth avenue, or, perched on 
the dome of the Grand Central Depot, it contemplates the 
mighty development and expansion of its earthly designs, 
now extended far beyond the limits of what its highest am- 
bition had dared to foreshadow. 

Some people may argue that it required greater abil- 
ity to acquire these first $90,000,000 than the present 
sum total of the wealth of the Yanderbilts. Those who 
argue thus, however, have no precedent to suggest their 
position. An instance of such prosperity on so large 
a scale in so short a time has never occurred in the 
history of financiering. The accumulations in all the 
wealthy families that I know of have been comparatively 
slow, and the history of the family of European millionaires 
shows a similar principle of gradation, except, indeed, that 
the gradation in the majority of instances has gone back- 
wards. Very few wealthy men, with the exception of the 
Eotbschilds, the Astors and a few others, have had any 
children capable of increasing their wealth, except where it 
was almost impossible to do otherwise under the law of 
primogeniture. In this country, therefore, where the law 
of distribution has full scope, Wm. H. Vanderbilt, who had 
to that time been regarded as a man of very moderate capa- 
city, proved himself to be the ablest financier of which 
there is any record either in ancient or modern history. 

Jay Gould, with all the resources of science at his dis- 
posal, and all the talent that money could command, with 
newspapers, politicians, lawyers, judges, and courts at his 
will, with as good a start, financially dating from 1878, as 
Wm. H. Vanderbilt had, has been left far behind in the 
race for wealth, and for the highest prize ever gained by 
one man in any nation. It has been truly said that a fool 
can make money, but it takes a wise man to keep it. Wm. 
H. Vanderbilt' s financial wisdom, as well as his ability, was 
signally displayed in keeping this great fortune intact, 
besides adding fully three times as much more to it ; and 



MORAIv EFFECTS OF THE MAMMOTH FORTUNE. 353 

it proves that his father made no mistake in selecting him 
to hand his name and fortune down to posterity. This im- 
mense pile of " filthy lucre," however, in spite of all the 
credit that is justly due to its late manager, has had one 
serious drawback from a public standpoint. In fact, the 
very announcement of this mammoth fortune in the news- 
papers, at the time of Mr. Wm. H. Vanderbilt's death, had a 
most demoralizing effect upon a large number of the wealthy 
portion of the community, who began to feel that they were 
nonentities in comparison. In making this statement I ab- 
solve the Yanderbilt family from any blame. Every man in 
this great Eepublic has the privilege of walking in the foot- 
steps of the two great Vanderbilts if he only has the ability; 
but it would not be wisdom for a large number of men to 
attempt it< They would be pretty certain to "get left." 

The storv of the distribution of the Yanderbilt wealth, how- 
ever, has brought discontent to many a home where happi- 
ness reigned before. It could hardly be otherwise, consti- 
tuted as human nature is, and especially human nature in 
our highly strung commercial society, where the spirit of 
ambition is always strenuously aiming at higher flights. 
People who heretofore had considered themselves rich, and 
socially important, with a million or so to draw upon, felt 
that they were mere ciphers in the scale of wealth ; they 
seemed to themselves to be financially blighted, and miser- 
ably poor in contrast with the colossal magnitude of the 
Vanderbilt possessions as exhibited in the Surrogate's Court. 
The plain, cold, prosy figures brought out there read like a 
romance, or the story of Sinbad the Sailor and the Valley of 
Diamonds. But it was all stern reality. This is why the 
feelings which suffer from this contrast are so deeply 
pathetic. It is a reality, and a stern reality, that can hardly 
be imitated or duplicated by any other two men in this 
generation. The thing is possible, but just about as prob- 
able as it was for every private soldier of Napoleon the 
Great, who each had a Marshal's baton in his knapsack, to 



354 COMMODORE VANDERBII/T. 

become a Marshal. "Every blacksmith," says the Rev. 
Robert Collyer, " might become a preacher, but it would be 
a great public calamity if it should happen to that extent." 
The bare outlines of the Vanderbilt wills, which have made 
such a deep impression on the community at large, will be 
found in another part of this book. I think they will afford 
very interesting reading for generations yet unborn. 



CHAPTEE XXXV. 

WILLIAM H. VANDERBILT. 

A Builder Instead of a Destroyer op Public Values.— 
His Eespeot for Public Opinion on the Subject of 
Monopolies. — His First Experience in Railroad 
Management. — How he Improved the Harlem Rail- 
road Property. — His Great Executive Power Mani- 
fested in Every Stage of Advance Until he Becomes 
President of the Vanderbilt Consolidated System. — 
An Indefatigable Worker.— His Habit of Scrutiniz- 
ing Every Detail.— His Prudent Action in the Great 
Strike of 1877, and its Good Results. — Settled all 
Misunderstandings by Peace and Arbitration.— 
Makes Princely Presents to his Sisters.— The Sing- 
ular Gratitude of a Brother-in-Law. — How he 
Compromises by a Gift of a Million with Young 
Corneel.— Gladstone's Idea of the Vanderbilt For- 
tune —Interview of Chauncey M. Depew with the 
G. O. M. on the Subject.— The Great Vanderbilt 
Mansion and the Celebrated Ball. — The Immense 
Picture Gallery. — Mr. Vanderbilt Visits Some 
of the Famous Artists.— His Love of Fast Horses. — 
A Patron of Public Institutions. — His Gift to the 
Waiter Students.— While Sensitive to Public Opin- 
ion, has no Fear of Threats or Blackmailers. — u The 
Public be Damned." — Explanation of the Rash Ex- 
pression. — The Purchase of "Nickel Plate." — His 
Declining Health and Last Days — His Will and 
Wise Method of Distributing 200 Millions. — Ef- 
fects of this Colossal Fortune on Public Sentiment. 

IN treating of the family in the order of descent, I shall 
now make a brief survey of the life of William H- 
Vanderbilt, especially in its relation to Wall Street affairs and 
the management of his great railroad system, the two being 
closely connected. William H. Vanderbilt was not 
much of a speculator in the Wall Street sense of the term. 
He was more of an investor than a speculator, and his in- 



356 WILLIAM H. VANDSRBII«T. 

vestments had always a healthy effect upon the market. 
Unlike Woerishoffer and others of that ilk, he built up 
instead of pulling down values, but was at the same time 
careful to avoid the error of inflation. He paid due defer- 
ence to public opinion also, in striving to allay its alarm in 
regard to the dangerous overgrowth of monopolies. A grand 
illustration of this was seen in the sale of the large block 
of New York Central. His first experience in railroad 
matters was in connection with the Staten Island Railroad, 
thirteen miles in length. The road had been mismanaged 
and was deeply in debt, and became bankrupt. As he and 
his father had considerable interest in the road William H, 
was appointed receiver. It seems this was done secretly at 
the suggestion of the Commodore, who wanted to discover 
by this experiment if his son had any capacity for 
railroad management. The receivership of the Staten 
Island road was crowned with signal success. In 
two years the entire indebtedness of the road 
was paid, and the stock, which had been worthless, 
rose to 175. William H. Vanderbilt was then elected 
President of the road. It was at this time, it is said, that 
the Commodore began to correct his judgment regarding the 
" executive ability of William H.," and the latter relaxed no 
effort to please his exacting father in everything, taking all 
his abuse without complaint or anger. After the Commodore 
seeured control of the Harlem road, which was his first 
great railroad venture, he made William H. Vice-President. 
As a co-worker with his father the latter further demon- 
strated his capacity for railroad management, and Harlem 
stock, which had been down to nearly nothing, in a few years 
became one of the most valuable railroad properties in the 
country. So, it is a fact, although not generally known, 
that William H. Vanderbilt had proved himself to be a 
competent railroad manager before his eminent father had 
fairly begun that line of business. It was almost entirely 
owing to his individual exertions and sound judgment that, 



HARD WORK HElvPS TO KIU, HIM. 357 

in a few years, the Harlem road was double-tracked, and 
such other improvements made as sent the stock from 8 or 9 
to above par. The Commodore was so highly pleased and 
agreeably surprised with his son's management of the Har- 
lem road that he made him Vice-President of the Hudson 
Kiver Eailroad also, and at a later date associated him in 
the same capacity with the management of the important 
consolidation of New York Central & Hudson Eiver. 
The great executive power of William H. was manifested in 
every successive movement which his father directed, and 
unparalleled prosperity was the result in every instance. 
After William H. was fully installed in the Vice-Presidency 
of the consolidated system of the Vanderbilt railroads he 
became an indefatigable worker, taxing his physical and 
mental powers to their utmost capacity, and it was doubtless 
this habit of hard work, persisted in for many years, that 
resulted in so sudden and comparatively premature death for 
a member of a family famous for its longevity throughout 
several generations. He insisted on making himself familiar 
with the smallest details of every department, and examined 
everything personally. He carefully scrutinized every bill, 
check and voucher connected with the financial department 
of the immense railroad system, and inspected every engine 
belonging to the numerous trains of the roads. In addition 
to this general supervision of everything that pertained to 
the railroads, he was in the habit of going over a large 
amount of correspondence which the majority of other men 
not possessing the hundredth part of his wealth hand over to 
their clerks, and he answered a great number of letters with 
his own hand which financiers of comparatively moderate 
means are in the habit of dictating to their stenographers. 
When his father died, at the age of 82, in January, 1887, 
William H. Vanderbilt, then 56 years of age, found himself 
the happy possessor of a fortune variously estimated at from 
75 to 90 million dollars. The remainder of the Commodore's 
bequests amounted ta 15 millions. 



358 WHJJAM H. VAND3RBII/T. 

After the death of his father the executive powers of Wm 
H. Vanderbilt, in the management of the vast railroad in- 
terests bequeathed to him, were called into active play. 
The great strike of 1877 among the railroad employes 
threatened to paralyze business all over the country, and 
came pretty near causing a social revolution. In this emer- 
gency a cool head and prudent judgment were valuable 
attributes to a railroad manager. Mr. Vanderbilt proved 
that he possessed both in more than an ordinary degree 
Just prior to encountering the knotty problem of the strike 
he had been highly instrumental in bringing about suspen 
sion of hostilities in the freight war, and the course whicb 
he advised led to an arrangement that produced harmony 
among the trunk lines for a considerable period. As a con 
sequence of the rate war the railroad companies were obliged 
to cut down the wages of their employes, and this was the* 
chief element in causing the strike. There were 12,000 men 
in the employ of the New York Central and Harlem. Their 
wages had been reduced ten per cent, and they had threat- 
ened to annihilate the Grand Central Depot. Instead of 
making application to have the militia called out, as had 
been done in Pennsylvania, Mr. Vanderbilt — although a 
man possessed of far more than ordinary courage — with 
keen foresight proposed a kindly compromise with his em- 
ployes. He telegraphed from Saratoga to his head officials 
an order to distribute $100,000 among his striking employes 
and promising them a restoration of the ten per cent, reduc- 
tion as soon as business improved to a point justifying such 
an advance. This prompt and prudent action had the 
desired effect, and the consequence was that while there was 
a small insurrection in Pittsburgh, and bloody war to the 
knife, at great cost to Allegheny County, calmness reigned 
in the prominent railroad circles of New York, and the tax- 
payers escaped the burden that might otherwise have been 
put upon their shoulders, and the demoralizing effects of 
violence and bloodshed were prevented. Over 11,500 of the 



A SINGULAR KIND OF GRATITUDE. 359 

12,000 men returned to work, thus showing their gratitude 
to Mr. Vanderbilt and faith in his promise, which was after- 
wards duly fulfilled. The policy of Wm. H, in the manage- 
ment of his great railroad system, unlike that of his father, 
was entirely pacific in its character. He was disposed to 
settle all misunderstandings by reason and arbitration, and 
had no inclination for fighting and conquest, after the man- 
ner of the Commodore. Although a very close calculator in 
business matters, a habit to which he adhered even to the 
precision of striking out superfluous items which should not 
have been charged in his lunch bill, Mr. Vanderbilt was in 
many respects generous to a fault. He compromised the 
suit with his brother, "Young Corneel," allowing him the 
interest on $1,000,000, whereas his father had only left him 
the interest on $200,000, with a forfeiture clause in the 
event of "Corneel" contesting the will Wm. H. also made 
a present of $500,000 in United States bonds to each of his 
sisters, out of his own private fortune. A good story is 
related in connection with the distribution of this handsome 
gift. Mr. Vanderbilt, it is said, went around one evening in 
his carriage, taking the bonds with him and dispensing them 
to the fortunate recipients from his own hands. One of his 
brothers-in-law having observed by the evening papers that 
the bond market had declined a point or two on that day, 
said, "William, these bonds fall $150 short of the $500,000, 
according to the closing prices of this day's market." "All 
right," replied Mr. Vanderbilt, with assumed gravity, " I 
will give you a check for the balance," and he wrote and 
signed it on the spot. It is related that another brother-in- 
law followed him to the door, and said, " If there is to be 
anything more in this line I hope we shall not be forgotten." 
It is said that these remarkable instances of ingratitude, 
instead of irritating him, as they would have in the case of 
an ordinary individual, only served to arouse his risible 
faculties and that he regarded the exhibitions of human 
weakness as a good joke. 



30)0 WIIXIAM H. VANDERBII/T. 

One of the greatest works of Mr. Yanderbilt's life was the 
building of the beautiful palace on Fifth avenue, between 
Fifty-first and Fifty-second streets, which he adorned exten- 
sively with paintings selected from the great masterpieces of 
the most renowned artists of the world. 

One reason assigned for his disinclination to speculate was 
that he regarded the property left by his father in the light 
of a sacred trust, and while he considered it a filial duty to 
look after its increase and accumulation, he was careful not 
to do anything that might risk its dissipation. 

Mr. Chauncey Depew, who succeeded to the presidency 
of the New York Central & Hudson Eiver Railroad Com- 
pany, was upon one occasion, while visiting in London, a 
guest at a dinner given to the Hon. Wm. E. Gladstone, then 
Premier of England, and was honored by a seat on the left 
of Mr. Gladstone, with whom he discussed the differences 
between American and English railroad and financial manage- 
ment. In the course of conversation Mr. Gladstone said, 
" I understand you have a man in your country who is worth 
£20,000,000 or $100,000,000, and it is all in property which 
he can convert at will into cash. The Government ought to 
seize his property and take it away from him, as it is too 
dangerous a power for any one man to have . Supposing 
he should convert his property into money and lock it up, 
it would make a panic in America which would extend to 
this country and every other part of the world, and be a 
great injury to a large number of innocent people." Mr. 
Depew admitted that the gentleman referred to — who was 
Mr. Vanderbilt — had fully the amount of money named and 
more, and in his usual suave and conclusive way, replied, 
"But you have, Mr. Gladstone, a man in England who has 
equally as large a fortune." 

Mr. Gladstone said, " I suppose you mean the Duke of 
Westminster. The Duke of Westminster's property is not 
as large as that. I know all about his property and have 
kept pace with it for many years past. The Duke's pro- 



WHAT GLADSTONE KNOWS OF BIG FORTUNES. 361 

perty is worth about £10,000,000 or $50,000,000, but it is 
not in securities which can be turned into ready cash and 
thereby absorb the current money of the country, so that he 
can make any dangerous use of it, for it is merely an here- 
ditary right, the enjoyment of it that he possesses. It is 
inalienable, and it is so with all great fortunes in this 
country, and thus, I think, we are better protected here in 
England than you are in America." " Ah, but like you in 
England, we in America do not consider a fortune danger- 
ous," was the ready response. 

The best proof of Wm. H. Vanderbilt's great ability as a 
financier is the marvellous increase in the value of the 
estate which he inherited from his father during the seven 
years which he had the use and control of it, and in which 
he did more than treble the value at which it was estimated 
on the death of the Commodore. 

The weakest financial operation on his part, known to the 
public, was the purchase of the Nickel Plate Koad, as re- 
gards the time of the transaction, in which he was rather 
premature. It is now positively known that if he had 
waited about a month longer the road would have gone into 
bankruptcy and have fallen into his lap on his own terms. 
In that case the West Shore would have followed suit. 

In such an event I believe Mr. Vanderbilt would have 
been saved an immense amount of money, remorse and 
mental strain, which, no doubt, aggravated the malady 
which was the cause of his sudden death. He realized his 
error when it was too late, and it was a source of great 
mental anxiety to him in his latter days. He was very 
sensitive, and nothing afforded him more gratification than 
a clean and successful transaction, which drew forth public 
approval, and in the purchase of Nickel Plate he was caught 
napping. It was a mistake for which the Commodore, had 
he been alive, could never have forgiven him. 

The syndicate that built the road had solely for their 
object to land it upon either Gould or Vanderbilt, and it 



362 WIUJAM H. VANDERBII/T. 

was upon its last legs at the time it made the transfer to Mr. 
Vanderbilt. The syndicate laid a trap for him. It had 
been coquetting with Mr. Gould in reference to the purchase, 
and had made it to appear, through the press and other 
channels of plausible rumors, that he had an eye upon the 
road. Mr. Gould had occasion to go West about this time 
and the syndicate invited him to make his homeward trip 
over the road, taking particular pains that all these rumors 
and reports should reach the ears of Mr. Vanderbilt, who 
was impressed with the idea that Mr. Gould's trip was one 
of inspection, with the intention of buying the road if he 
did not anticipate him. This was just what the syndicate 
desired, and the successful consummation of their financial 
plot. 

The purchase was made solely in the interest of Lake 
Shore, as it was a parallel road, and the road was afterwards 
turned over to the Lake Shore Company. 

The conception of the scheme was to build the- road at a 
nominal price and sell it to Mr. Vanderbilt as high as possi- 
ble, and this was duly accomplished. I am quite satisfied that 
if this road had not been sold at this particular time it would 
then have gone into the hands of a receiver, while a number 
of the syndicate, who had built the road, would have failed, 
and a general crash would have ensued. This Mr. Vander- 
bilt' s purchase averted for the time, and served to prolong 
the period of its coming until May, 1884. 

For a few years prior to his death Mr. Vanderbilt was in 
a weak condition. This cause of mental annoyance came 
upon him at a time when he Was not robust enough to bear 
it and had not sufficient strength to throw it off. He had been 
seized with a slight paralytic stroke, the only visible effect 
of which was a twitching of the lower lip. Shortly after 
this he lost the entire sight of one eye, about a year before 
his death. This was not generally known to the public, how- 
ever, and it was the principal cause of his giving up his 
favorite pastime of driving, which was one of his greatest 



A VALIANT DEADER IN WALL STREET. 363 

pleasures and the chief source of mental diversion from the 
heavy weight of his worldly cares and responsibilities. 

The day after Mr. Vanderbilt's death I sent the following 
circular to my customers : 

" As Mr. Wm. H. Vanderbilt was a very important factor 
in Wall Street business, I feel it incumbent upon me to 
issue a letter to my friends and clients on the subject of his 
decease, especially as the loss to the Street is a most im- 
portant one, and certainly will be felt for some time to come. 
Mr. Vanderbilt undoubtedly, at the time of his death, was 
the largest holder of American securities in the world, and 
had innumerable followers, who were also vast holders 
of similar properties as those he controlled, who acted more 
or less in concert with him, and who were at his beck and 
call. When he told them to buy or sell they would do so. 
Those parties have now lost a valuable friend and counsellor, 
and a leader in whom they believed implicitly. In such 
quarters, for some time to come at least, more or less of a 
dazed condition will prevail, precisely the same as would 
exist in an army in the event of the general in command 
having been killed. Mr. Vanderbilt was a bolder and larger 
operator than his father ever dared to be, as he spread out 
over more interests. The market has lost an able leader, 
who was usually a builder-up of the interests of the entire 
country, and unlike many other large operators, who, at 
times, are on that side, but quite as frequently on the wreck- 
ing side. It will be a long while before so conspicuous and 
valiant a leader as Mr. Wm. H. Vanderbilt will be forth- 
coming, and the market will, for a protracted period, have 
cause to mourn its great loss. It is, indeed, fortunate that 
Mr. Vanderbilt lived long enough to see the completion of 
the consolidation of the West Shore and New York Central 
roads ; since both roads are under the able direction of Mr. 
Depew, they are now secure from future harm ; but the same 
cannot be said of the South Pennsylvania enterprise, as 
negotiations remain in connection therewith unfinished, 
which will suffer by Mr. Vanderbilt's death, and it will be 
found difficult, I fear, for any other man to knit the dis- 
cordant elements together that at present exist in that quar- 
ter. There is enough in this for some ground of apprehen- 
sion, and this matter may, therefore, disturb the harmony of 
the great trunk lines, as this speck of trouble may yet prove 



334 WIUJAM H. VANDERBII/T. 

a cancer in the body of the stock market. As it is capable 
of infusing its poison elsewhere, beyond where it is at pres- 
ent located, it is certain that there will be required skill- 
ful surgery to prevent inoculation therefrom. 

" The stock market started off to-day as if held by concerted 
action, and the appearances indicating that such attitude 
might prevail to bridge over the Vanderbilt shock. While 
prices had a moderate break, it was scarcely adequate as a 
fitting tribute of respect to Mr. Vanderbilt' s memory, as the 
great General of the Army of Finance of this country. It 
was unmistakable, however, that the large selling was mostly 
of long stock, coming from numerous frightened holders 
who were shaken out, and it was very evident that the bears 
were more conspicuous as buyers than as sellers, to cover 
their short sales made during the previous several days. I 
do not think that the market had, considering the power it 
has lost in the death of Mr. Vanderbilt, as much of a break 
as should have occurred ; still, it must be remembered, that 
the dealings have been so enormous during the past month, 
which represent the immense number of operators now in- 
terested in the market, that it has taken from it a character 
which previously existed as a one man market, and therefore 
it is owing to this fact that the removal of any one man, or 
a half dozen of them, by death or otherwise, could not bring 
about, at the present time, any very wide and lasting dis- 
aster to Wall Street. This market, as I have repeatedly 
stated, can fairly be now considered the market for the world, 
and beyond the permanent reach of any one man doing it 
any lasting harm. As Mr. Vanderbilt invented pegging 
stocks, and stood his ground when taken better than any 
one that will survive him in that plan of strategic move- 
ment, he will, in that particular alone, be sorrowfully missed. 
I am of the opinion, now that Mr. Vanderbilt is no more, 
that Mr. Gould's plan of leaving the Street will undergo a 
modification, at least by his remaining for some time longer 
at the helm. This will prove, in such an event, an impor- 
tant factor in the future, especially as the bulls of the Street 
have for at least a year past recognized Mr. Gould in the light 
of a benefactor. To them he has proved a brave and able 
leader, and the field is now clear for him to become com- 
mander-in-chief of all the forces, without any one to dispute 
his right thereto. This should be enough to fire his ambi- 
tion and keep him in our midst, and probably will." 



A GOOD JUDG^ op true ari\ 365 

Among the popular and erroneous impressions entertained 
regarding Wm. H. Vanderbilt, the one that he was no judge 
of pictures seemed to have taken deep root in the public 
mind, except among the few who knew him intimately, and 
the celebrated artists whom he visited and from whom he 
purchased many of the works of art which adorn his great 
gallery in Fifth avenue, now in charge of his youngest son, 
George. That Mr. Yanderbilt had an intimate knowledge 
and correct appreciation of true art has been amply proved 
by the highest authority. I am well aware that some years 
ago this statement would have been ridiculed by the major- 
ity of the newspapers ; but Mr. Vanderbilt never bought a 
picture that he did not fully understand in his own simple, 
unaffected method of judgment. He may not have been 
capable of the highest flights of fancy, necessary to follow 
the poetic imagination of the artist to its extreme height, but 
he was equal to the task of grasping all the material essen- 
tials from a common-sense point of view. 

So far from making any pretence of being a lover of art, 
he was in the habit of saying, when a handsome painting 
was shown him, "It may be very fine, but until I can appre- 
ciate its beauty I shall not buy it." 

Apropos of his modesty and judgment, in regard to the 
fidelity to nature of a picture, a circumstance is related of 
his visit to Boucheron, a French picture dealer, where he 
wanted to see a painting by Troyon, with the object of buy- 
ing it A yoke of oxen turning from the plough to leave 
the field is the subject. Experts in art had taken exception 
to the manner in which the cattle left the field. When Mr. 
Vanderbilt's opinion was asked, he said, "I don't know as 
much about the quality of the picture as I do about the 
truth of the actions of the cattle. I have seen them act like 
that hundreds of times." The artists present submitted to 
his judgment, as he knew more about the oxen than they 
did. When in France he visited the celebrated Bosa Bon- 
heur, at Fontainebleau, who was about his own age, and 



866 WILLIAM H. VANDKRBII/T. 

gave her an order for two pictures, which she painted to hia 
entire satisfaction. He had his portrait painted by the 
celebrated Meissonier, to whom he paid nearly $200,000 for 
seven pictures. He purchased in Germany this artist's 
masterpiece, "The Information — General Desaix and the 
Captured Peasant," for $40,000, giving Meissonier, who had 
not seen it for many years, a great surprise, and filling the 
heart of the enthusiastic artist with unbounded gratitude for 
rescuing the picture from Germany and bringing it to 
America. * 

Mr. Vanderbilt's taste for music, especially operatic music, 
was refined, and he had a keen sense of the humorous. 

Neither Mr. Vanderbilt nor any of his family ever dis- 
played any anxiety to hobnob with those people who are 
known as the leaders of society, although possessed of more 
wealth than the greatest of them. The celebrated fancji 
dress ball, given by Mrs. Wm. K. Vanderbilt, at the sugges 
tion of Lady Mandeville, in March, 1883, seemed to have 
the effect of levelling up among the social ranks of upper- 
tendom, and placing the Vanderbilts at the top of the heap, 
in what is recognized as good society in New York. So far 
as cost, richness of costume and newspaper celebrity were 
concerned, that ball had, perhaps, no equal in history. It 
may not have been quite so expensive as the feast of Alex-I 
ander the Great at Babylon, some of the entertainments of 
Cleopatra to Augustus and Mark Antony, or a few of the 
magnificent banquets of Louis XIV., but when viewed from 
every essential standpoint, and taking into account our 
advanced civilization, I have no hesitation in saying that 
the Vanderbilt ball was superior to any of those grand his- 
toric displays of festivity and amusement referred to, and more 
especially as the pleasure was not cloyed with any excesses 
like those prevalent with the ancient nobility of the old 
world and frequently exhibited among the modern " salt of 
the earth " in the mother country. The ball had the effect 
of drawing the Astors and the Vanderbilts into social union. 



THE GREAT BAU, AND ITS SOCIAL, ASPECTS. 367 

The entente cordiale was brought about in this way, as the 
story goes : * 

Several weeks before the ball Miss Carrie Astor, daughter 
of Mrs. William Astor, organized a fancy dress quadrille, to 
be danced at the ball. Mrs. Vanderbilt, it seems, heard of this 
and said, in the hearing of some friends, that she was sorry 
Miss Astor was putting herself to so much trouble, as she 
could not invite her to .the ball, for the reason that Mrs. 
Astor had never called on her. This was carried to Mrs. 
Astor, who immediately unbent her stateliness, called on 
Mrs. Vanderbilt, and in a very ladylike manner made the 
amende honorable for her former neglect. So the Astors 
were cordially invited to the ball, where Miss Astor pre* 
sented a superb appearance with her well trained quadrille. 

All Mr. Vanderbilt's other attachments vanished in pres- 
ence of his love for his. horses. When any company, of 
which he formed a part, began to talk horse his tongue was 
immediately loosened and he became eloquent. Although 
generally a man of few words and diffident as a talker, he 
could throw the eloquence of Chauncey M. Depew in the 
shade when the subject was horse. He not alone admired 
the speed of his horses ; he seemed possessed of the fond- 
ness of an Arabian for them, and, like old John Harper of 
Kentucky, would probably have slept with them only through 
fear of the newspapers criticising his eccentricity. It was 
he who introduced the custom of fast driving teams, first 
with Small Hopes, purchased by his father, and Lady Mac, 
purchased by himself. With this team, in a top road wagon, 
he made the then remarkable time of 2.23J. 

A host of rivals immediately sprang up, of whom Mr. 
Frank Work was the most formidable. Mr. Vanderbilt pro- 
cured faster teams, and with Aldine and Early Rose, under 
the spur of competition, reduced the time to 2.16£. Mr. 
Work, however, was a daring and persistent rival, and soon 
beat this record, although only by a fraction of a minute, 
which in trotting or racing counts just the same as if it 



S68 WILLIAM H. VANDERBII/T. 

vere an hour. Mr. Vanderbilt then purchased the famous 
Maud S. in Kentucky for $21,000, and with her and Aldine 
made the mile in Fleetwood Park in June, 1883, in 2.15|. 

He afterwards reduced this time to 2 08 J, leaving Mr. 
Work and all other rivals hopelessly in the distance. Event- 
ually he sold Maud S. to Mr. Robert Bonner for the com- 
paratively small amount of $40,000, on condition that she 
should never be trotted for money.. Other men would have 
given $100,000 for her without this condition. 

On the 12th of August, this year, Murphy, the famous 
jockey, drove Maud S. in single harness, at Tarrytown, a mile 
in 2.10i, and declared he did not push her. He said he was 
confident he could make her do the mile in 2.06 or 2.07 if 
Mr. Bonner would permit him, thus smashing all trotting 
records. 

It has been said by experts in driving that Mr. Van- 
derbilt was the best double team driver in America, either 
amateur or professional. 

Mr. Vanderbilt's bequests were liberal and numerous. He 
added $300,000 to the million which his father gave, through 
the wife of the Commodore and Dr. Deems, to the Nashville 
University. He gave half a million to the College of Physi- 
cians and Surgeons, and his sister, Mrs. Sloane, added a 
quarter of a million to this generous donation. It cost him 
over $100,000 to remove Cleopatra's Needle from Egypt to 
Central Park. He offered to cancel the $150,000 check 
which he gave to General Grant to relieve him from the 
Ward-Fish embarrassment, and his munificent gift to the 
waiter students in the White Mountains will long be remem- 
bered. 

Although Mr. Vanderbilt was very courageous, as was 
proved by the fact that no matter how many threatening let- 
ters he may have received — and their name was legion — from 
cranks, socialists and others, he never made any change in 
his programme or his routine of business for the day, and 
never absented himself from the place where he was expected 



THE GREAT SAI,E OF CENTRAI, STOCK. 369 

at any particular hour on account of such letters. Yet he was 
peculiarly sensitive to public opinion, and sought in various 
ways to correct its hasty judgment in regard to himself and 
his enormous wealth. 

It was this sensitive feeling, together with his profound re- 
spect for popular opinion against monopolies, which induced 
him to sell a controlling interest, 300,000 shares out of 400,- 
000, at from 120 to 130, ten points below the market price, of 
New York Central stock in 1879 to a syndicate, the chief mem- 
bers of which were Drexel, Morgan & Co., Morton, Bliss & Co., 
August Belmont & Co., Winslow, Lanier & Co., L. Yon Hoff- 
man & Co , Cyrus W. Field, Edwin D. Morgan, Bussell Sage, 
Jay Gould and J. S. Morgan & Co. of London. The amount 
paid for the stock was $35,000,000. As the syndicate largely 
represented the Wabash system, the stock of that property, 
as well as New York Central, had an important advance. 

The reasons assigned for this stupendous and unprecedented 
stock transaction are briefly condensed by Mr. Chauncey M. 
Depew as follows : " Mr. Vanderbilt, because of assaults 
made upon him in the Legislature and in the newspapers, 
came to the conclusion that it was a mistake for one indivi- 
dual to own a controlling interest in a great corporation like 
the New York Central, and also a mistake to have so many 
eggs in one basket, and he thought it would be better for 
himself and better for the company if the ownership were 
distributed as widely as possible. The syndicate after- 
wards sold it, and the stock became one of the most widely- 
distributed of the dividend-paying American securities. 
There are now about 14,000 stockholders. At the time he 
sold there were only 3,000." 

That hasty expression, " The public be damned," which 
Mr. Vanderbilt used in an interview with a reporter for a 
Chicago newspaper, has received wide circulation, various 
comment and hostile criticism. Although the expression is 
literally correct, the public at first, and many of them to 
this day, received a wrong impression in regard to the spirit in 



370 WIUJAM H. VANDERBII/T. 

which it was applied. It was represented as if Mr. Vander- 
bilt was a tyrannical monopolist, who defied public opinion, 
A true and simple relation of the interview is a sufficient 
answer to this. The subject was the fast mail train to 
Chicago. Mr. Vanderbilt was thinking of taking this train 
off, because it did not pay, and did not appear to him there- 
fore to be a necessity, and he did not propose to run trains 
as a philanthropist. As part of the interview which 
relates to this point has become so widely historic, I think 
it will bear reproduction here, literally : 

" Why are you going to stop this fast mail train V 9 asked 
the reporter. 

"Because it doesn't pay," replied Mr. Vanderbilt; "I 
can't run a train as far as this permanently at a loss." 

" But the public find it very convenient and useful. You 
ought to accommodate them," rejoined the reporter. 

" The public," said Mr. Vanderbilt. " How do you know, 
or how can I know that they want it ? If they want it why 
don't they patronize it and make it pay % That's the only 
test I have as to whether a thing is wanted or not. Does it 
pay ? If it doesn't pay I suppose it isn't wanted." 

" Are you working," persisted the reporter, u for the pub- 
lic or for your stockholders ?" 

"The public be damned !" exclaimed Mr. Vanderbilt, "I 
am working for my stockholders. If the public want the 
train why don't they support it." 

This, I think, was a very proper answer from a business 
standpoint, and the expression, when placed in its real con- 
nection in the interview, does not imply any slur upon the 
public. It simply intimates that he was urging a thing on 
the public which it did not want and practically refused. 
The " cuss " word might have been left out, but the crushing 
reply to the reporter would not have been so emphatic, and 
that obtrusive representative of public opinion might have 
gone away unsquelched. As it was, however, he and his 
editor exhibited considerable ingenuity in making the best 



371 

misrepresentation possible out of the words of Mr. Yander- 
bilt, thus giving them a thousand times wider circulation 
than the journal in which they were first printed, and afford- 
ing that paper a big advertisement. This is the correct 
account of that world- renowned expression, " The public be 
damned !" 

The mausoleum at New Dorp, Staten Island, is another 
outcome of the genius of Wm. H. Yanderbilt. Mr. Kichard 
M. Hunt was the architect. Pursuant to the instructions of 
Mr. Yanderbilt, it was built without any fancy work, but at 
the same time on such a grand and substantial scale that it is 
said there is nothing among the tombs of either European or 
Oriental royalty to excel it, in solidity of structure and 
grandeur of design. It is forty feet in height, sixty in 
breadth and about 150 in depth. It is situated on an emin- 
ence commanding the largest prospect of the bay, and one 
of the finest views all around in the State of New York. 
The tomb and the twenty- one acres of land, upon the highest 
part of which it stands, cost nearly half a million dollars, and 
when the grounds are finished, in the style intended, beautiful 
roads and walks made, flower gardens planted with the requi- 
site adornments, the entire expense of the mausoleum and 
its surroundings will not fall far short of a million dollars. 

The precautions taken by the family against resurrec- 
tionists is one of the best that has ever been adopted. There 
is a guard at the tomb night and day. Each of these must 
put on record his vigilance every fifteen minutes by wind- 
ing up a clock, which is sent to the office at the Grand Cen- 
tral Depot every morning. 

In May, 1883, Mr. Yanderbilt, finding that his railroad 
duties were too heavy for him, resigned the presidencies of 
his roads and took a trip to Europe. James H. Eutter was 
elected President of the Central, and on his death was suc- 
ceeded by Chauncey M. Depew, the present President, who 
so ably fills that office. About a year before his death Mr. 
Yanderbilt gave unmistakable notice of his approaching 



$72 WIUJAM H. VANDERBII/T. 

dissolution when he stopped driving his fast teams, and went 
out riding with some other person to drive for him. He 
must have keenly felt his growing weakness when he was 
obliged to resign the reins which he so fondly desired to 
hold, and which he had handled with such inimitable skill. 

The death of Mr. Vanderbilt was a great surprise, espe- 
cially to Wall Street, as very few brokers were aware even of 
his failing health. On the 8th day of December, 1885, he arose 
early, apparently no worse in health than he had been for a 
year previous. He went to the studio of J. Q. A. Ward and 
gave that artist a sitting for the bronze bust ordered by the 
Trustees of the College of Physicians and Surgeons. Mr. 
Depew called upon him at one o'clock, but finding that Mr. 
Eobert Garrett, President of the Baltimore & Ohio Eailroad 
Company, had also called to see Mr. Yanderbilt, Mr. Depew 
waived his opportunity in favor of Mr. Garrett. Mr. Garrett 
was conversing on his project of getting into New York by 
way of Staten Island and a bridge over the Arthur Kill. They 
were in the study. Mr. Vanderbilt sat in his large arm 
chair and Mr. Garrett sat on a sofa opposite to him. It 
seems that Mr. Vanderbilt was in perfect harmony with the 
plans of Mr. Garrett. While he was replying to the remarks 
of Mr. Garrett the latter observed that his voice began to 
falter and there was a curious twitching of the muscles about 
his mouth. Soon he ceased to speak and had a spasm. In 
a moment he leaned forward and would have fallen on his 
face on the floor, but Mr. Garrett caught him in his arms, 
laid him gently on the rug and put a pillow under his head. 
This was only the work of a few moments, but before it was 
accomplished the greatest millionaire in America had ceased 
to breathe. When Dr. McLean, the family physician, arrived 
he said a blood vessel had burst in the head, and so death, 
according to the frequently expressed wish of Mr. Vander- 
bilt, was instantaneous. 

On the announcement of Mr. Vanderbilt's death, (which 
was after Board hours), a panic was predicted in the stock 



WHY THERE WAS NO PANIC. 373 

market. A pool was formed of the most wealthy leading 
operators, with a capital of $12,000,000, to resist such a ca- 
lamity. It was not required, however. There was a reaction 
of a few points in the morning following, which was recov- 
ered before the close of the market. The stocks of Mr. Van- 
derbilt's properties, as well as the properties themselves, had 
been so well distributed that such a disaster could hardly 
have occurred without a strong outside combination to help 
it, and the prevalent desire there was to assist speculation 
in the very opposite direction. The remains of Mr. Vander- 
bilt were conveyed to New Dorp and deposited in the tomb 
without any ostentation. 

In the chapter on the young Vanderbilts a brief account 
of the disposition of the mammoth fortune of $200,000,000 
ie given. 



CHAPTEE XXXVI. 

"YOUNG CORNEEL" 

The Eccentricities of Cornelius Jeremiah Vanderrilt, 
and his Marvellous Power for Borrowing Money. — 
He Exercises Wonderful Influence over Greeley 
and Colfax. — A Dinner at the Club with Young 
"Corneel" and the Famous Smiler."— " Corneel 
tries to make himself solid with jay cooke.— 
The Commodore Eefuses to Pay Greeley. — "Who 
the Devil Asked You % " retorted Greeley. — " Cor- 
neel's" marriage to a Charming and Devoted Woman. 
How she Softened the Obdurate Heart of heb 
Father-in-Law. 

COKNELIUS J. VANDERBLLT, the brother of Wm. 
H., popularly known by the name of "Young Corneel," 
is entitled to a place in this book, as he was prominent 
among the many financial friends I have had, in his own 
peculiar Hue. 

"Corneel" was eccentric, and was possessed of some 
astonishing peculiarities that made him a genius in his way. 
He led a charmed and adventurous life in his own circles. 

He had a wonderful facility for getting into scrapes, and 
il banked" on the Commodore to extricate him therefrom, 
which the latter did on many occasions. The mere fact, 
however, that he had such a father, was in itself sufficient, 
very often, to get him out of his troubles* without any effort 
on the part of the Commodore in that direction. " Corneel," 
however, worked this " racket" for all it was worth, and in 
time it became almost exhausted. Still, he went on making 
new acquaintances without limit, and to many of them the 
name of the Commodore was a sufficient guarantee of security 
for sundry loans, that were promised to be paid on the ful- 
filment of certain expectations which only existed in the 
borrower's imagination. 



376 

But it was not very safe for " Corneel " to rely upon his 
father, or to bank upon his credit in any case. If he had de- 
pended solely on the paternal security, he would often have 
found, when in his worst straits, that he had leaned upon a 
willow cane for support. " Corneel " had a peculiar fascin- 
ation in his ability to catch the ear of prominent men, who 
would listen attentively to his tale of woe, and some of them 
were so thoroughly under the spell of his persuasive powers 
that they would " fork " out the required amount without 
hesitation, to relieve his pressing necessities. 

It is sad to relate that the money thus sometimes piteous- 
ly solicited, and really required to pay a board bill or room 
rent, was often thrown away in the first gambling den that 
the borrower happened to be passing, while the landlady 
and the washerwoman would be obliged to extend their bills 
of credit indefinitely. 

Amongst the special friends upon whom he was in the 
habit of exercising his alluring magnetism were the Hon. 
Schuyler Colfax and Horace Greeley. Over both of these 
eminent gentlemen he seemed to have perfect control. So 
hopelessly were they under the charm of his occult power 
that they seldom said u no " to any request that he made> 
especially when he wanted to borrow money. No sorcerer 
ever had his helpless victims more completely at his mercy, 
nor had greater power by the touch of his mysterious wand, 
than " Corneel " had over these and certain other men, when 
he would entertain them with a list of imaginary wrongs 
which he had suffered at the hands of his father and brother. 
In their ears this story never seemed to become stale, though 
it was the same old story every time, with hardly any at- 
tempt at variation. To them and others, over whom he ex- 
ercised this unaccountable influence, the thing did not seem 
to become monotonous like other twice-told tales, related by 
ordinary people. 

To the man of average intellect and common business 
capacity a Corneel " was a shocking " bore " and a victim of 



THE SECRET OF HIS BORROWING POWER. 377 

morHd melancholia, but these men of genius were won by 
the impression which he had made upon them, and thorough- 
ly imbued with the deepest sympathy for the wrongs which 
his strange hallucinations conjured up. Unlike most men 
who borrow money from friends and don't pay, instead of 
exhausting his credit by this business delinquency, he made 
it the basis for increasing it, and it generally seemed to be 
a potent means of enabling him to borrow more. Hence 
his obligations to Mr. Greeley were persistently cumulative 
until they exceeded $50,000. 

I have been told by a person familiarly acquainted with 
him that years after Greeley's death he would sometimes sit 
in deep meditation, with the tears welling up in his eyes, 
especially when in a great financial strait, and sighingly 
say : " When Mr. Greeley died I lost the best friend in the 
world." Be it said to his credit, however, in spite of all his 
shortcomings, he exhibited his honesty by paying every 
cent of the debt, with interest, to Mr. Greeley's daughters. 
He also paid the greater part of all the other debts which he 
had contracted under similar circumstances, after making a 
settlement with Wm. H. and receiving a much larger amount 
than he had been left by the will of his father, who be- 
queathed him merely a decent competence for his rank and 
station in life, without any surplus for the policy shops and 
faro banks. 

One of the qualities possessed by " Corneel" in a remark- 
able degree, and which enabled him to be so successful a 
borrower, was his extreme earnestness. He bent his whole 
energies to the work in hand, and his requests usually met 
with ready response. If he had put the same energy and 
intense enthusiasm into legitimate speculation, he would 
have been as successful as his father or Jay Gould. He 
must have been an intuitive judge of character, for he showed 
that he generally knew his man in advance of making appli- 
cation for sundry little loans. In that respect he was not 
unlike the famous huntsman who was a dead shot every 
time. 



378 

My first acquaintance with "Corneel" was through one 
of his special friends, the Hon. Schuyler Colfax, whom he 
brought to my office for the purpose of having himself in- 
troduced by Mr. Colfax. He informed me that he had just 
then returned from Hartford, Conn., where he had taken his 
friend, Mr. Colfax, for a week's visit at his house. It can 
be readily imagined, therefore, that at this time Mr. Colfax 
had but little control over his own bank account and for a 
long time afterwards. 

I invited both these gentlemen to dinner at the Club that 
afternoon. Although Mr. Colfax was an extraordinarily good 
talker, he was left far in the distance and almost silenced 
by " Corneel." Most of what the latter said, however, had 
very little in it of a tangible character, and was almost en- 
tirely made up of unstinted praise of his friend Colfax. If 
ever there was a man talked up to the skies, or if the thing 
were possible, Colfax must have been literally in that ele- 
vated position during our dinner. 

There was no let-up to the unqualified adulation, yet I 
must say that there was none of the uninterrupted stream of 
fulsome flattery fell to the ground. Schuyler took it all 
in as he did his viands, and as if it were legitimately his 
due, a proof positive that " Young Corneel " was not mistaken 
in his man ; and a further demonstration of his natural sa- 
gacity in striking the man upon whom he could successfully 
exercise his peculiar charms of persuasion. 

When he got tired talking about Mr. Colfax, the object of 
his next theme was Mr. Greeley, on whom he was profusely 
prolific. 

I met Mr. Greeley frequently afterwards, and told him 
what a good friend he had in young Cornelius Vanderbilt. 
" Yes," he said, with a knowing smile, " I think he is a good 
friend of mine. I have heard of his frequently saying nice 
things about me. It is a cere at r>itv, however." he added 
significantly, " that he is so frequently short of funds. If 
he had more money he would be a very good fellow." 



EXPERIMENTING ON JAY COOKER 379 

It was generally in the way above referred that lie 
would steal a march on Mr. Greeley and impose Cn his good 
nature. He would say nice things about him to some one 
who would quote him to Mr. Greeley, and thus pave the 
way for an additional loan. In a few days afterward " Cor- 
neel" would call on his tried and trusty friend, and never fail 
to obtain the needed relief, or a large portion of it. 

"Corneel" had great tact in utilizing his various f J van- 
tages for borrowing, and was imbued with a thorough devo- 
tion to his object, worthy of a better cause. The dsy follow* 
ing his first visit to my office, he called again and told me 
that his friend Colfax had left by the early train for Wash 
ington, and had urged him to go along, but as l?e had some 
matters to attend to he had postponed his der arture until 
the night train. 

He said to me, "By-the-bye, you know Jay Cooke very 
well." 

I said, "Yes." 

Then he replied, " I have some matters to look after in 
connection with the Treasury Department, and I think he 
could be of some service to me. Will you be good enough 
to oblige me with a letter of introduction to him ? I may 
not need it," he added with a business air of sang froid, " but 
I should like to have it in case of need." 

I wrote him a brief and non-committal introduction, some- 
what as follows : 

" This will introduce to you Mr. Cornelius Vanderbilt, Jr., son of the 
Commodore. I take the liberty of making you acquainted with him 
through this medium, at his own request. 

"Truly yours, Heney Clews." 

There was certainly nothing on the face of this document, 
except the Commodore's name, to justify any person in util- 
izing it as a bill of credit. 

Yet the financial genius of * Young Corned" was equal to 
the tas& of an indirect negotiation of this character, and 
after the lapse of a few days his drafts from Jay Cooke be- 



380 "young corner." 

gan to pour into my office like April showers. None of them 
was very large, but when put together they: aggregated a 
pretty fair amount, and were so cumulative in their charac- 
ter that, had I not wired Mr. Cooke to stop the supplies, it 
is difficult to say what figure the sum total would have 
reached. 

The last time I saw " Young Corneel" was at Long Branch, 
where he took a drive with me one fine warm afternoon. He 
spoke feelingly about his wasted life, and concerning the 
many good friends who had come so often to his rescue, and 
had got him out of his numerous holes, into which, through 
misfortune, he had been thrown. He said all there was of 
life for him was to live long enough to pay up old scores. 
He had fully determined to do this, and then, he thought, a 
prolongation of existence would have no further charms for 
him. It must be said to his credit that he accomplished this 
work, and then laying himself sadly down, died by his own 
hand. 

Let us, therefore, throw the mantle of charity over that 
tragic scene in the Glenham Hotel, and hope that his soul 
may elsewhere have found the rest which in its poor, afflicted 
body it vainly sought for here. 

That portion of the Commodore's will in which he makes 
provision for Cornelius J. is thoroughly characteristic of 
the old man, in its iron-clad provisions. It says : li I direct 
that $200,000 be set apart, the interest thereof to be applied 
to the maintenance and support of my son, Cornelius J. 
Yanderbilt, during his natural life. And I authorize said 
trustees, in their discretion, instead of themselves making 
the application of said interest money to his support, to pay 
over from time to time, to my said son, for his support, such 
portions as they may deem advisable, or the whole of the 
interest of said bonds. But no part of the interest is to be 
paid to any assignee of my said son, or to any creditor who 
may seek by legal proceedings to obtain the same ; and in 
case my said son should make any transfer or assignment of 



HIS BESETTING SIN WAS GAMBLING. 381 

his beneficial interest in said bonds or the interest thereof, 
or encumber the same, or attempt so to do, the said interest 
of said bonds shall thereupon cease to be applicable to his 
use, and shall thenceforth, during the residue of his natural 
life, belong to my residuary legatee. Upon the decease of 
my said son, Cornelius J., I give and bequeath the last 
mentioned $200,000 of bonds to my residuary legatee." 

Though a portion of this provision is rather whimsical, 
yet it was ably designed to force " Corneel " to desist from 
his besetting sin, the gaming table. 

If the trustees were permitted to pay him the whole of 
the interest at whatever period they should choose, it seems 
harsh that the beneficiary should forfeit it entirely, if he 
should seek to relieve present and pressing necessities, by 
borrowing on his future income. It showed that the Com- 
modore, even at the hour of his death, thought that " Cor- 
neel " was not fit to be treated otherwise than as a child, and 
that it was necessary he should be kept under the guardian- 
ship of his brother. 

This circumstance hurt " Corneel's " feelings greatly, as 
he imagined himself a bigger man, mentally, than Wm. H. 
This opinion, however, no other man could conscientiously 
endorse, except it might have been Greeley or Colfax. 

" Corneel," though always exclaiming against the old 
man's hard-heartedness, had an intense admiration for his 
father's abilities, and he was as sensitive as a sunflower 
when any other person would say a word to disparage the 
Commodore. While railing constantly at the parsimony of 
his father, he was as devoted a hero-worshipper of the Com- 
modore as Thomas Carlyle ever was of the greatest of his 
heroes, and he never grew tired talking of his achievements^ 
with the history of which he was thoroughly familiar. He 
had even a more intense hatred against Gould than his 
father had, and solemnly believed that Gould and Fisk had, 
during the manipulation of the Erie " corner," conspired to 
assassinate the Commodore. 



382 "young corneei,." 

Of course this was one of his many hallucinations, and 
there was not the least ground for it, but he had got it 
indelibly on the brain, and he would not tolerate contradic- 
tion in that notion any more than in any other opinion 
which he had got fixed in his morbid mind. He once went 
into an epileptic fit in the presence of a friend of mine who 
attempted to reason with him on the improbability of such 
a man as Gould contemplating murder. 

He never forgave his father for having him arrested and 
incarcerated in Bloomingdale Lunatic Asylum. He had 
run off to California the time of the gold fever, and shipped 
as a sailor. He was then in his eighteenth year. When he 
returned, which was pretty soon, as he had no ability to 
enter into the terrible mental and physical struggle for 
wealth on the gold coast, his father had him arrested. It 
was soon discovered that he was no lunatic, however eccen- 
tric he might be, and he was released, but he took the mat- 
ter dreadfully to heart, and it had a melancholy and de- 
moralizing effect upon all his future life. He was petulant, 
and still complaining, and often acted like a crazy man in 
that the more any of his intimate friends tried to please him 
he seemed the more dissatisfied ; yet it was impossible to 
get along with him withoutjiumoring him, and it was almost 
next to impossible to humor him. In this way he could 
work on the minds of the strongest of his friends, so as al- 
most to put them into a fit as bad as one of his own. 

Dr. Swazy's patience was often put to a very severe test 
in his attempt to please this eccentric invalid. 

" Corneel" was a miser everywhere except at the gaming 
table, and would cling to a cent with greater tenacity than 
ordinary people display in holding on to a ten dollar bill. 
But among the gamblers either a ten- dollar bill or a hun- 
dred-dollar bill was less valuable in his eyes than a cent 
in the common transactions of every day life. " Faro" and 
" keuo" had terrific power over him. He has often been 
known to have had an epiletic fit at the gaming table, get 



HORACE GREELEY and the commodore. 383 

a doze afterwards which seemed like the sleep of death, 
so cadaverous did he look on those occasions, and then 
awake up and go on with the play, whose fascination he ap- 
peared utterly powerless to resist. 

When it came to the ears of the Commodore that Greeley 
was lending his son hundreds and sometimes thousands of 
dollars at a time, he visited the office of the Tribune. He 
rushed without ceremony into the sanctum, where Greeley 
was busy at his high desk, grinding out a tirade against 
some political or social abuse, and thus addressed the Sage 
*>f Chappaqua : " Greeley, I hear yer lendin* ' Corneel 
money." "Yes," said Greeley, eyeing the monarch of steam- 
boat men through his glasses, with an air of philosophic con- 
tempt mixed with commisseration ; " I have let him have 
some." "I give you fair warning," replied the Commodore, 
* that you need not look to me ; I won't pay you. " " Who 
the devil asked you ?" retorted Greeley. " Have I ?" 

This closed the interview. The Commodore retraced his 
steps down the rickety stairs into Spruce street, and 
Greeley continued to grind out his illegible chirography for 
the profane printers. There is no record, I believe, that the 
subject was ever reverted to between them. Soon after the 
death of Greeley the Commodore sent a check for $10,000 
each to his two daughters. 

The Commodore was well satisfied with the marriage of 
young " Corneel" to Miss Williams, of Hartford, Connec- 
ticut, and he had hoped that his son would begin then to 
lead a new life, but he was doomed to disappointment. 

There is a good story told about an interview between the 
Commodore and Mr. Williams prior to the marriage. 

Mr. Williams called upon the Commodore at his office in 
Fourth street, near Broadway, and informed him that his 
son, Cornelius Jeremiah, had asked his daughter in mar- 
riage, and she was willing if the Commodore had no objec- 
tion to the union. 

"Has your daughter plenty of silk dresses V asked the 
Commodore, sententiously. 



384 "young corner." 

" Well," replied Mr. Williams, showing some sensitiveness 
at what he at first considered assumption of superiority and 
purse-pride on the part of the Commodore, " my daughter, 
as I told you, is not wealthy. She has a few dresses like 
other young ladies in her station, but her wardrobe is not 
very extensive nor costly.'' 

" Has your daughter plenty of jewelry ? " continued the 
Commodore, without appearing to take much notice of Mr. 
Williams' explanation. 

"No, sir," replied Mr. Williams, becoming slightly 
nettled, and showing a laudable pride in opposition to what 
he considered a slur on account of his moderate means, " I 
have attempted to explain to you that I am in comparative- 
ly humble circumstances, and my daughter cannot afford 
jewelry." 

"The reason I ask you," pursued the Commodore, "is, 
that if she did possess these articles of value, my son would 
take them and either pawn or sell them, and throw away 
the proceeds at the gaming table. So I forewarn you and 
your daughter that I can't take any responsibility in this 
matter." 

The nuptials were duly consummated, however, in spite 
of the Commodore's constructive remonstrance. 

After the marriage " Corneel " asked his father for some 
money to build a house. " No, Corneel," he said emphat- 
ically, " you have got to show that you can be trusted before 
I trust you." 

His wife made application to her father-in-law with bet- 
ter success, however. He gave her a check for $10,000. In 
a few months afterward she paid another visit to the Com- 
modore, who received her cordially, but expected she had 
come for another loan, and he was attempting to work up his 
courage to the point of refusal ; for, strong and almost invin- 
cibly obdurate as he was in the general affairs of life, in 
the presence of the fair sex, like Samson when he got his 
hair cut, he was weak and like another man. 



A PITTANCE OF $200 WEEKLY. S85 

"Well," said the Commodore, addressing his daughter-in- 
law with a kindly smile, " what can I do for you now f 

"Well, papa," she replied in her exceedingly candid and 
agreeable manner, " we did not need all the money, so I 
brought you back $1,500." 

The Commodore could hardly believe his ears and eyes, 
and thought for a moment that he must be under some 
mysterious delusion, superinduced by the spiritual seance3 
which he then was in the habit of attending. But when 
the cash was put in his hand he found it was a material 
reality. This sealed a warm friendship between him and 
his worthy and economical daughter-in-law, which was 
only severed by her premature death about ten years before 
that of her unfortunate husband. 

The sympathy that some people manifested for " Young 
Corneel " was, like his own maladies, of the most morbid or 
delusive character. He had $200 a week from his father all 
the time that he was whining to the public about his pinch- 
ing poverty and denouncing the old man's niggardliness. 
This would have been ample, with fair economy, not only 
for all the necessaries of life, but, under judicious manage- 
ment, would have afforded the recipient many of its luxuries. 

With his irresistible propensity for gambling, he would 
not have been any better off physically, but worse, with the 
entire income from his father's 75 or 100 millions. The only 
difference that should have arisen was that he would have 
been instrumental in carrying out in part the socialistic and 
communistic idea of a wider distribution of private property, 
amassed by thrift, privation and industry, among the drones, 
lazy " loafers " and criminals of society. 

The Commodore's judgment, therefore, in limiting his 
prodigal son to $200 a week, was not only comprehensive, 
but beneficent in its results both to his son and to society 
«t large. 



CHAPTEE XXXVII. 

THE YOUNG VANDERBILTS AND THEIR FORTUNES. 

Eemarkable for Physical and Intellectual Ability. — 
The Mixture op Eaces and the Law op Selec- 
tion.— The Wonderpul Will and the Wise Distri- 
bution of Two Hundred Millions.— Tastes, Habits 
and Social Proclivities op the Young Vander- 
bilts. — The Married Eelations of Some of Them. — ■ 
Being Happily Assorted they make Good Hus- 
bands. — Their Property Eegarded as a Great 
Trust. — Their Eailroad System and its Great 
Army of Employes. — The Young Men Cautious 
about Speculating, and Conservative in their Ex- 
penses Generally. 

THE young Vanderbilts who have succeeded to the estate 
of their father, William H., are all remarkable for both 
intellectual and physical power, as well as a high degree of 
refinement, showing how fast human evolution under favor- 
able circumstances progresses in this country. In other 
countries it takes many generations to develop such men as 
the present Vanderbilts. In this country three generations 
in this instance have produced some of the best samples of 
nature's nobility, which is superior in every respect to the 
proud and vain-glorious production which emanates from 
the succession of " a hundred earls " in England, or even a 
greater number of barons, princes and kings on the Conti- 
nent of Europe. It would be difficult to produce better 
types of men in the short period named than Cornelius, 
William K., Frederick and George Vanderbilt, in personal 
appearance, breeding and culture. 

The mixture and amalgamation of races from all parts of the 
world have doubtless had a great deal to do with such favor- 
able results in the reproduction of our species in the United 
States. In the old country close intermarriages seem to 
have a deteriorating effect on the race, with probably the 



388 THE YOUNG VANDERBII/TS AND THEIR FORTUNES. 

one apparent exception, namely, the house of Rothschild, 
and a little longer time may tell that the rule of deteriora- 
tion holds good in this case also. 

The four sons of William H. Vanderbilt have had the 
greatest start in life of any family in all the records of his- 
tory, ancient and modern, with the single exception, prob- 
ably, of the five Eothschild brothers, the sons of old An- 
selm, and they had not near so much money to begin with, 
but had the advantage of the Vanderbilts in their locations 
and in their methods of combination. These methods, as I 
have observed elsewhere, could only be attained through 
the Hebrew religion. By the provisions of the remarkable 
will, which revealed such enormous wealth as to make almost 
every other millionaire feel comparatively poor, the greater 
portion of 200 million dollars was divided among the eight 
children of the testator. Millions were distributed in this 
case as other millionaires have been in the habit of dealing 
with thousands. The ordinary human mind fails to grasp 
the idea of such a vast amount of wealth. If converted into 
gold it would have weighed 500 tons, and it would have 
taken 500 strong horses to draw it from the Grand Central 
Depot to the Sub-Treasury in Wall street. If it had been 
all in gold or silver dollars, or even in greenbacks, it would 
have taken Vanderbilt himself, working eight hours a day, 
over thirty years to count it. If the first of the Vanderbilts 
had been a contemporary of old Adam, according to the 
Mosaic account, and had then started as president of a rail- 
road through Palestine, with a salary of $30,000 a year, sav- 
ing all this money and living on perquisites, the situation 
being continued in the male line to the present day, the sum 
total of all the family savings thus accumulated would not 
amount to the fortune left by Wm. H. Vanderbilt, unless 
this original $30,000 had been placed at compound interest, 
and that in a bank from which young Napoleons of finance 
had been strictly excluded. 

The will itself affords one of the best tests on record of 




TpTMz^^u^^CJ- 



PROVISIONS OF THE MARVELOUS WILI,- 

the sound judgment and equitable mind of the testator. He 
was under filial obligations to a certain extent to revere the 
memory and respect the opinions of the father through 
whom he had acquired the means of accumulating this won - 
derful fortune. 

The Commodore had modified ideas of primogeniture, not 
exactly in the English sense of the term, but he had an 
intense desire to perpetuate his name and wealth, and would 
doubtless have advised William H., and perhaps he did, to 
bequeathe nearly all his possessions to one of his sons, leav- 
ing the rest of the family a bare independence. 

Wm. H., in accordance with his sensitive disposition, 
upright mind, and a due respect for the feelings, opinions 
and even the prejudices of others, resolved to make what 
public opinion would be likely to consider an approximately 
fair division of his immense estate. In this attempt, I 
think he succeeded pretty well, considering all the circum- 
stances and difficulties with which he had to grapple. A 
synopsis of the will itself, however, herewith inserted, will 
enable the public to be the best judge of the equity of the 
case. 

In the first place Mr. Vanderbilt devised to his wife the 
palatial residence, which cost two millions, situated between 
51st and 52d streets on Fifth avenue, the stables on Madi- 
son avenue, the paintings and statuary, and an annuity of 
$200,000 per annum. He also empowered her to dispose of, 
by will, in any way she might desire, $500>000 out of the 
sum set apart to produce her annuity of $200,000. 

He bequeathed to each of his four daughters, Mrs. Elliott 
E. Shepard, Mrs. William Sloane, Mrs. Hamilton McK. 
Twombly and Mrs. William Seward Webb, an elegant house 
on Fifth avenue in the vicinity of his own mansion. He 
then devised 40 million dollars' worth of securities, 25 
millions of which were in United States bonds, to be 
divided by the trustees equally among his eight children, 
five millions each. Next he bequeathed 40 millions more in 



390 THE YOUNG VANDERBII/TS AJSTD THEIR FORTUNES. 

securities, ten millions of which were in United States 
bonds, and the balance in securities of his own railroads, to 
his eight children, share and share alike. 

He gave to his son Cornelius two million dollars in addi- 
tion to all other bequests made to him. 

George W., his youngest son, is to receive at the death of 
his mother all that she possessed during her natural life, and 
if he should die without issue his inheritance shall go to 
Wm. H., the son of Cornelius, but in the event of this con- 
tingency not occurring, the grandson, Wm. H., is to receive 
a million on attaining the age of 30. 

Then followed a host of small legacies to relatives, friends 
and employes. He left $2,000 a year to each of his uncle 
Jacob's three children. 

He gave $200,000 to the Vanderbilt University of Nash- 
ville, Tenn., founded by his father ; and he left about a 
million in the aggregate to twelve charitable and religious 
institutions. 

The twenty-second clause of the will is the most import- 
ant, especially to his two eldest sons. It reads as follows : 

" Ml the rest, residue and remainder of all the property 
and estate, real, personal and mixed, of every description 
and wheresoever situated, of which I may be seized or 
possessed, or to which I may be entitled at the time of my 
decease, I give, devise and bequeath unto my two sons, 
Cornelius Vanderbilt and William K. Vanderbilt, in equal 
shares, and to their heirs and assigns, to their use forever." 

Mrs. Vanderbilt was appointed executrix and her four 
sons executors of the will. The witnesses were Judge 
Charles A. Eapallo, Samuel F. Barger, C. C. Clarke and 
I. P. Chambers. 

This remainder, left to his two sons named in the clause 
cited, amounted to about 50 million dollars each, in addition 
to their other bequests, thus leaving each of them nearly as 
wealthy as their grandfather was when he died. CorneiiuA 
is said to be worth over 80 million dollars. 



BUSINESS AND DOMESTIC ATTRIBUTES. 391 

Cornelius is the oldest son. He is a year or two over 
forty. He received a good education, and had an excellent 
business training in his father's offices at the Grand Central 
Depot. He has always been remarkable for strict attention 
to business, and for his thorough familiarity with everything 
connected with his own department, as well as having a 
good general knowledge of all the departments of the great 
railroad system. When his father retired from active work, 
and the presidency of the roads, Cornelius succeeded him as 
Chairman of the Board of Directors in New York Central 
and Michigan Central. 

Wm. K. took a similar position in Lake Shore, and was 
also elected President of New York, Chicago & St. Louis, 
generally called the Nickel Plate road. 

Cornelius was married about fourteen years ago to Miss 
Alice Gwinn, a handsome young lady of Cincinnati, and has 
four children. He resides in an elegant house, at the corner 
of Fifty-seventh street and Fifth Avenue, and has a hand- 
some summer residence, " The Breakers," at Newport. 

He is connected, as an active worker, with various chari- 
table and religious institutions, and is very favorably known 
and highly respected in the best social circles. He is gain- 
ing a great reputation through various donations to laudable 
objects. Among these may be mentioned the Club House 
in the vicinity of the Grand Central Depot, for the accom- 
modation of employes of the various railroads connected 
with the Vanderbilt system. Also his magnificent gift to 
the Metropolitan Museum of Art, thy celebrated picture of 
Kosa Bonheur, "The Horse Fair," which is valued at 
$60,000. In this he surpassed the most liberal efforts of 
Mr. George I. Seney, in one of his grand specialties, namely? 
contributions to Art. 

William Kissam Vanderbilt, the second son of Wm. H., 
also received a fair education, and graduated in business in 
the Transportation Department of his father's great railroad 
system, where he exhibited marked ability in mastering all 



302 THE YOUNG VANDERBII/TS AND THEIR FORTUNES. 

the essentials, and in doing his work with rapidity and 
accuracy. He is considered the most handsome and the 
most imposing in appearance of any of the family, although, 
as I have intimated at the beginning of this chapter, they 
are all above the average in regard to the manly and gentle- 
manly virtues, owing to what Darwin would have designated 
the "natural law of selection." Wm. K. has a grand man- 
sion, on the corner of Fifty-second street and Fifth Avenue, 
and a country residence at Islip, Long Island, where he 
usually summers. He is about thirty-eight years of age. 
He is married to Miss Alva Smith, the daughter of a wealthy 
merchant of Savannah. She is a leading lady in society, 
considerably above the average in good looks, and possessed 
of rare conversational powers, with an ample fund of wit 
and humor. They have three children. 

Frederick W. Vanderbilt, the third son of the late million- 
aire, seemed to have had a greater desire for study than the 
two former, hence after going through the ordinary course 
for boys at home, he went to Yale, where he graduated in the 
Sheffield Scientific School. Thus equipped he went into his 
father's office, and made himself thoroughly acquainted with 
the general routine of the whole business, in every depart- 
ment. 

He married Mrs. Torrance, formerly the wife of his cousin. 
Young Yanderbilt fell in love with her and married her in 
a year afterward. She is an exceedingly attractive woman, 
and the union is a very happy one. Mr. Yanderbilt gave 
Frederick the house at Fortieth street and Fifth Avenue, in 
which he himself had resided prior to his removal to the 
Fifth Avenue palace. This house was built by the old Com- 
modore for his son W. H. It was considered to be the finest 
residence in the city at the time of its completion. 

George W. Vanderbilt, the youngest of the four sons, is 
now about 25 years of age. He is not so robust as the 
others, but enjoys pretty good health. He manifested a 
decided tendency at an early age for study and reading. 



THE ANTI-POVERTY SOCIETY. 333 

He is said to be extensively read in literature for his age, 
and has written some essays on various subjects, which 
give considerable promise of success with perseverance in 
that line. He is a lover of the fine-arts, knows the history 
of all the pictures in the great gallery which his father col- 
lected, and like that revered parent, whose constant com- 
panion he was during the last few years of his life, he is 
very fond of the opera. His grandfather, the Commodore, 
left him a million dollars, to which his father added another 
million on his twenty-first birthday. 

George W. has recently made a handsome present to the 
Bond street free public library, donating thereto $40,000 
to build a branch of that institution at 251 West Thirteenth 
street. He bids fair to be a liberal patron of letters, and 
no doubt his gifts in this way will be prudently directed 
and made with good judgment. The man who can appre- 
ciate learning, as George Vanderbilt has proved he can, will 
never be likely to leave the terms of an endowment to a 
public library, for instance, which he intended for the ben- 
efit of the whole community, so loose that a clique of 
trustees can restrict all its privileges to a limited number 
of ladies and gentlemen of leisure, by narrowing the hours 
of keeping the institution open, as has been done with 
those two fine libraries intended by the donors for the 
people at large, namely, the Astor and the Lenox. 

New York is comparatively poor in its libraries, even on 
the supposition that these public trusts should not be tam- 
pered with, and their original object defeated ; but when 
the best of them are diverted from the purpose originally 
intended by the philanthropists who presented them to the 
public, a great wrong is inflicted on the citizens of New 
York. 

There has been a great deal said and written during the 
past few years about the Vanderbilt system of railroads 
being a great monopoly. I am not in favor of monopolies. 
On the contrary, I have, in this book, as well as through 
othsr mediums of reaching the public, and in interviews 



394 THE YOUNG VANDERB1XTS AND THEIR FORTUNES. 

published all over the country, denounced monopolies in 
very strong terms. I regard the Yanderbilt property, how- 
ever, in the light of a great trust, the four young men above 
referred to, with Chauncey M. Depew, the President of New 
York Central, being the trustees, and I question very much 
if that eminent team of honest and able reformers, Henry 
George and the Eev. Dr. Edward McGlynn, with other 
minor lights of the Anti Poverty Society, could administer 
that trust with greater benefit to the public, nor could they 
employ a greater army of well-paid, easy-worked, and well- 
fed men by any State or National supervision or manage- 
ment, or by breaking up the great corporation into probably 
a hundred or more small companies. 

The Yanderbilt system employs 200,000 people at better 
wages than they can obtain elsewhere, any place in the 
world. It pays over $150 an hour for taxes. The State is 
paid $1 for every $2.70 received by the stockholders. 

Nor can I think it possible that the paternal system of 
Government proposed by the Socialists, with all the modern 
discoveries and appliances of dynamite to aid them, could 
accomplish as much in a century for the well-being and ad- 
vantage of the people of this State and of the whole coun- 
try as the Vanderbilt system of railroads has done in half 
that time. I see no reason, therefore, to regard the present 
Yanderbilt regime as a grinding monopoly. 

Until the Georgeites, the McGlynnites, and the Socialists 
demonstrate that their untried systems will confer greater 
happiness on humanity than honest enterprise in the best 
circumstances, under our present social system, with all its 
defects, has developed, I shall be tardy in subscribing my 
adhesion to the new order of things. 

I don't wish to be understood for a moment as implying 
that I am averse to free thought, the highest development 
of humanity, mentally and physically, and the most ad- 
vanced evolution in the same direction. I aim at keeping 
abreast of all these within the free exercise of my own 
judgment, and it is thus that I can heartily applaud Dr. 



THK PI,UCK OF THE GKORG^-MC GlyYNN PARTY. 



395 



McGlynn for his polite but firm refusal to visit the Eternal 
City for the purpose of being corrected or regulated in re- 
gard to free thought and free speech, as viewed from the 
American standpoint, by a foreign potentate, who assumes 
the guardianship and governorship of all human affairs, both 
from a spiritual and secular point of view. 

The days of Hildebrand (Pope Gregory VII.) are gone for 
ever, and Leo XIII. should have sense enough to know it. 
McGlynn will never stand, like Henry IV., shivering in his 
shirt at the door of the Vatican, awaiting his sentence of 
penance to Canossa. Bismarck, however, came pretty near 
repeating this little historical episode not long since, but 
the great Chancellor of the German Empire, unlike Mc- 
Glynn, did not have the advantage of an American educa- 
tion, and the independence which it confers. He may, 
therefore, to some extent be excused. I think, however, that 
McGlynn will stick, and I admire his firmness. No church, 
no matter how powerful its foreign allies may be, can sup - 
press free speech in the home of the brave and the land of 
the free. 

So, in their battle for freedom of speech, I admire the 
pluck of the Gcorge-McGlynn party, but as regards their 
social theories, I shall remain in a waiting mood until I see 
them more fully demonstrated. 

To return from this little digression, however, I wish to 
express the hope that the young Vanderbilts will manage 
their vast estate so as to inure to the public benefit in such 
a way that the most fastidious Socialist will be unable to 
take exception to the benign results. 

The young Vanderbilts have at intervals speculated in 
Wall street, but conservatively, with the exception of Wil- 
liam K., who, in the past, has made numerous and spas- 
modic turns, chiefly on the advice of older operators, which 
have not always redounded to his interest. As a rule these 
young men are shrewd and cautious financiers, and I think 
it is safe to say that none of them will run the risk of losing 
his handsome fortune in speculation. 




From Harper's Magazine. Copyright, 1873, by Harper & Brothers. 



SOLOMON ROTHSCHILD, 

Head of the old House at Vienna. 



CHARLES ROTHSCHILD, 

Head of the old House at Naples. 



ANSELM MAYER ROTHSCHILD, 

Head of the House at Frankfort, 1812-35. 



CHAPTEE XXXVIII. 

THE ROTHSCHILDS, 

The Beginning of the Financial Career op the Great 
House of Rothschild.— The Hessian Blood Money 
was the Great Foundation of their Fortune. — How 
the Firm of the Five Original Brothers was Con- 
stituted. — Nathan the Greatest Speculator of the 
Family. — His Career in Great Britain, and How He 
Misrepresented the Besult of the "Battle of 
Waterloo " for Speculative Purposes. — Creating a 
Panic on the London Stock Exchange — His Terror 
of Being Assassinated. —His Death Causes a Panic 
on the London Exchange and the Bourses. 

AS the Rothschilds have indirectly made an immense 
amount of money in Wall Street from time to time, a 
sketch of the famous house and its methods of doing business 
will be of interest in this volume. The house is represented in 
America by Mr. August Belmont, than whom there is no 
banker more widely known and more highly regarded all the 
world over. It is due to the wise and conservative manage- 
ment of Mr. Belmont that the famous Rothschilds have reaped 
millions of profits from American sources. The original name 
of Rothschild was Bauer. The family adopted the name Roths- 
child (Red Shield) from the sign which the founder of the 
house kept over his dingy little shop in Frankfort-on-the- 
Main, in the odoriferous quarter called the Judengasse 
(Jews' street). In this little shop Mayer Anselm Rothschild, 
the founder of the house, discounted bills, changed money, 
examined the quality of coins, bought cheap and sold dear. 
" How do you get so rich, Mr. Rothschild % " said a friend of 
his to old Anselm one day, as he leaned over his dusky little 
counter. The original head of the great house said : " I 
buys ' sheep ' and sells ' deer.' " His knowledge of the 
quality of coins was marvellous. He could detect a light 



398 THE ROTHSCHILDS. 

coin the moment he took it in his hand, and there was no 
imitation diamond or gem could escape his eye. He had the 
instinct of genius in detecting everything in the form of 
money or jewelry that was not genuine. He was a walking 
directory so far as the financial standing of every com- 
mercial man in Frankfort and in several other important 
cities in Germany was concerned. At the age of seventeen 
young Eothschild took rank with the best, oldest and ablest 
financiers of Frankfort. His father, who died when Mayer 
Anselm was thirteen years of age, had intended to make him 
a Eabbi, but the coin had such attraction for him, that it 
quickly drew him from the Talmud, and he established him- 
self in his father's narrow quarters as a financier. 

It is not generally known that Eothschild' s first great stajrt 
in financial life was given to him by the use of the twenty mil- 
lion dollars which was paid to the Landgrave of Hesse, Fred- 
eric II., by George III. of England, for 17,000 Hessians to 
help to whip George Washington and retain the American 
Colonies. This blood money was the original basis of the 
vast fortune of the Eothschilds. It was deposited with 
Mayer Anselm by William IX., the successor of Frederic, 
whose example was followed bj other great ones of the earth, 
and in a few years the agents of the kings and princes of 
Europe were flocking to Frankfort to negotiate loans with 
Eothschild on behalf of their mighty patrons. 

There is a very interesting story related, giving the reason 
why the Landgrave passed by all the great bankers of Frank- 
fort and entrusted this large amount, together with a similar 
amount afterwards, to Eothschild. The latter had occasion to 
visit Prince William at his palace in Cass el, and found him 
playing a game of chess with Baron Estorff. Eothschild pru- 
dently kept quiet and did not interrupt the game, but stepped 
lightly up and stood behind the prince's chair, where he 
could watch every move. The Prince was getting the worst of 
the game, and was becoming a little excited. Turning around, 
he said : " Eothschild, do you understand chess ? " " JSuni- 



A UJCKY GAME OF CHESS. 399 

ciently well, your Serene Highness," replied Kothschild, 
" to induce me, were the game mine, to castle on the king's 
side." The Prince took the hint, and won the game. Then 
turning to Eothschild, he said : " You are a wise man. He 
who can extricate a chess player from such a difficulty as I 
was in, must have a very clear head for business." 

The Prince afterwards told the Baron that Eothschild was 
as good a chess player as Frederic the Great, and that a mas 
of such capacity must be able to take good care of money. 
The forty millions which were obtained on deposit remained 
with the house of Eothschild for nine years, and when 
Napoleon invaded Germany in the interim, the money, to- 
gether with other valuables, was hidden in wine casks in 
Eothschild' s cellar, but the Conqueror never thought of tap- 
ping the casks. After peace was proclaimed, and William, 
who had been obliged to seek safety in flight, returned 
home, old Eothschild was dead, but his son Anselm handed 
over to the Prince every dollar of the forty millions, and 
tendered him in addition two per cent, interest for the entire 
time of the deposit. The Prince made him a present of the 
interest. 

The elder Eothschild had five sons, namely : Anselm, who 
succeeded his father in Frankfort ; Solomon, of Vienna ; 
Nathan Mayer, of London ; Charles, of Naples ; and James, 
of Paris. According to their father's will, the five sons were 
to constitute but one firm, in which they were to enjoy 
equal profits, and never divide the fortune. The business 
was to be managed at Frankfort as headquarters, to which 
great money centre all the profits from the other moneyed 
capitals were to be raked in. The intention of the old man 
was to make these five money kings dominate Europe by 
the power of their wealth, so that the ordinary kings would 
become their subjects, and in many instances the hopes of 
the great old chess player have been realized. All the an- 
nual settlements were made at Frankfort, and the brothers 
met there at least once a year for a general conference. 



400 THE ROTHSCHILDS. 

This system continues, and though the original fire brothers 
have all passed over to the majority, the last of them, James, 
having died in Paris in 1868, at the ripe age of 78, yet the 
representatives of the house in the large cities of Europe 
sustain the principles of union, harmony and consolidation 
laid down by old Anselm Mayer Kothschild. Although this 
union has been the great source of the Eothschilds' success, 
it would be hopeless, however, for any other parent outside 
the Hebrew race to imitate the injunction of old Eothschild. 
The idea of an equal division of the profits could not be en- 
tertained for a moment by an American. The socialistic 
family tie that enjoined such an arrangement could only be 
rendered binding through the power of the Hebrew religion. 
Just imagine how an American would feel if by some lucky 
turn of fortune, like that of Nathan Eothschild in London, 
after the battle of Waterloo, he should make six millions 
in a day, and be requested to divide it with his four 
brothers ! He would sooner spend a million of it to try and 
break the old man's will, and employ several of the best 
sophistical lawyers he could find to prove that his father 
was demented. 

It is supposed that the elder Eothschild died worth 15 or 
20 millions, but this is in a great measure merely conjecture, 
as nobody outside the family ever knew what their real wealth 
was, this fact having always been kept an inviolate family 
secret. It must be said, to the credit of the old man, that in 
his latter days, instead of becoming stingy, as many do, he 
was quite liberal, and, according to the scriptural injunction, 
distributed his alms in secret, without even permitting his 
sons to know anything about the matter. He contributed 
largely to various charities in the same way. It is said he 
would go through the poverty-stricken districts of the city 
after night, giving money to the needy, from whom he would 
retreat before giving them time to thank him for his benefi- 
cence. He had a notion that those who gave without re- 
ceiving thanks were greater favorites with the Divine Being, 
who rules the destinies of man. 




From Harper's Magazine. Copyright, 1873, by Harper & Brothers. 



NATHAN MAYER ROTHSCHILD. 

(The Financial Hero of Waterloo.) 



ON THE FIELD OF WATERLOO. 401 

The greatest speculator of the five brothers was Nathan 
Mayer Eothschild, the third son of the great old man. He 
made the grand hit of his life after the battle of "Waterloo. 
He kept watching the movements of the opposing armies on 
the Continent, and followed Wellington very closely as he 
approached the famous field. It seems that the Iron Duke 
was not at all pleased with Nathan's attention to him, as he 
took him for either a spy or an assassin, and was on the 
point of having him arrested several times. But Nathan 
kept his purpose steadily in view, in spite of the fact that 
bullets were whizzing around his ears in showers. He sat 
on his horse on the hill of Hougomont with perfect com- 
posure in the teeming rain the whole afternoon, looking 
upon that terrible struggle that was to decide the destiny of 
nations, until Blucher arrived and the French were put to 
route. 

As soon as Nathan saw this he put spurs to his steed 
and made all possible haste to Brussels, where a carriage 
with swift horses was in waiting to carry him to Ostend. 
At day light next morning he arrived on the Belgian 
coast, where he found it exceedingly difficult to obtain a 
boat, the sea being very rough. At length he obtained a 
boatman as courageous as himself, who undertook the task 
for 2,500 francs, and landed him at Dover in the evening. 
He lost no time, but with relays of the swiftest horses 
pushed forward to London, and was on the Exchange next 
morning ready for business, long before the opening of the 
market. That was the morning of the 20th, only a day aud 
two nights after the battle that decided the fate of nations. 
Nathan had performed a great feat. He acted his role well. 
Like the great hero whose political history had just closed, 
Nathan was " grand, gloomy and peculiar," in the financial 
sense of the phrase. He was an embodiment of the latest 
information from the Continent. In defiance of winds 
and waves he had, at the risk of his life, outstripped the 
swiftest couriers and the best special correspondents of that 



402 THE ROTHSCHILDS. 

day. The great operators nocked around hini asking, 
"What is the news ? " Nathan sighed heavily and seemed 
reluctant to tell. Eventually, this important piece of in' 
formation was extorted from him, in strict confidence: 
"Blucher, at the head of his vast army of veterans, was 
defeated by Napoleon at Ligny, on the 16th and 17th (of 
June), and there can be no hope for Wellington with his 
comparatively small and undisciplined force." This state- 
ment was substantially true, and it forcibly reminds one of 
Tennyson's poetic remarks : 

" A lie which is all a lie 
May be met and fought with outright, 

But a lie which is half a truth, 
Is a harder matter to fight." 

True, Blucher had been repulsed at Ligny. The Duke had 
an awkward squad, with the exception of the English, the 
Irish, and the Scotch Greys, to marshal in fighting order, 
but he " got there all the same." Nathan's secret point soon 
oozed out, and in less than an hour after the opening there 
was a perfect panic on the London Stock Exchange. Nathan 
had his brokers at work, first selling " short," and then, when 
the market reached bed rock, buying on the long side. He 
bought everything that he could raise, borrow or beg the 
money for — consols, notes and bills. When the news of 
Wellington's victory arrived, forty-eight hours after Nathan 
had begun to manipulate the market, and when he was "long" 
of everything that he had money or credit to purchase, 
securities went up with a boom. Nathan realized six mil- 
lion dollars, and it is said that a large number of the great 
operators flocked around him to congratulate him. It was 
lucky for Nathan that the scene of his operations was in 
London instead of Wall Street, otherwise Judge Lynch 
might have had something to say before the settlements had 
been made. 

The career of Nathan Rothschild in England was remark- 
able, and his success from the very start phenomenal. He 



HE MARRIED A MIUJONAIRE' S DAUGHTER. 403 

began his speculations and money-lending operations in 
Manchester with $500, being the limited amount which he 
was permitted to draw from the family treasury on taking 
his departure from Frankfort to seek his fortune in Great 
Britain. In five years he had augmented the $500 to a million. 
He then removed to London. There he married a daughter 
of Levi Cohen, one of the wealthiest Hebrews of the great 
metropolis, well known by the pseudonym of Pound- Adoring 
Cohen. His father-in-law was afraid that Nathan would 
soon ruin himself, so reckless did he seem in his specula- 
tions, estimated by the conservative standard of old Cohen. 
Nathan was very fortunate in his speculative ventures in the 
public funds, and managed to get himself introduced so as 
to do considerable business for the Government in its trans- 
actions on the Continent. His first introduction to the Govern- 
ment was through the Duke of Wellington, who during his 
peninsular campaigns had made drafts that the Treasury of 
Great Britain was dilatory in meeting. Nathan purchased 
these drafts at a large discount. He afterwards renewed 
them to the Government, and they were eventually redeemed 
at par. This was the means of bringing him into confiden- 
tial relations with the ministry of Great Britain, and he 
was entirely trusted as their chief agent in all their finan- 
cial matters on the Continent. This gave him immense 
advantage in speculating, and enabled him to give his 
brothers in the other great capitals of Europe a large 
amount of valuable and inside information, which put them 
in a position to speculate with .success in the funds of their 
respective Governments. Nathan had made arrangements 
to get the very latest information from Frankfort, then the 
centre of European financiering, by well trained carrier 
pigeons. He had also several boats of his own by which 
to send personal messages across the channel in cases 
where these were requisite, and a boat always in readiness 
at a moment's notice in case his presence should be indis- 
pensable at the great money centre, and the central counting 
and clearing house of the family. 



404 THE ROTHSCHILDS. 

Nathan Rothschild was a strange and inconsistent com- 
pound of liberality, avariciousness, and penuriousness. He 
entertained his guests in a princely style, and often princes 
were mingled with those guests, but he was miserably mean 
with his clerks and employees generally. Unlike A. T- 
Stewart, who followed the very opposite rule, and had his 
place filled with bankrupt dry goods men as employees, the 
Rothschilds would never engage anybody who had been un- 
fortunate in business. They had a superstitious feeling that 
misfortune is contagious, and they carefully avoided coming in 
contact with any of its victims. Nathan was even more precise 
thanWm. H.Vanderbilt in calculating the pennies in his lunch 
bill ; but while Vanderbilt did this as a mere whim to illus- 
trate his business precision and correctness, Rothschild 
really loved the pennies with ardent devotion. But Baron 
Nathan, even when he had accumulated $70,000,000 or $80,- 
000,000, was not happy. He was tortured by the fear of 
enemies, who, he believed, intended to murder him. Like 
Vanderbilt, he received many threatening letters ; but 
unlike the New York millionaire, who paid no attention to 
threats, but walked and drove out defiantly, Rothschild was 
still in mortal terror, and believed that the threats were in- 
tended to be executed. Nathan made one of his biggest 
piles out of the Almaden quicksilver mines in Spain. The 
Spanish Government wanted a loan, which he granted, receiv- 
ing the mines as security for several years. He got up a 
" corner" in quicksilver, and raised the price 100 per cent. 
He realized almost $6,000,000 out of this transaction. 
It was as good for him as the Waterloo deal, only the 
returns did not come in so quickly. Nathan died in Frank* 
fort, at the age of 59, in 1836. His last words were, " He is 
trying to kill me. Quick, quick, give me the gold." His 
death created a panic on the London Stock Exchange, and 
the Continental Bourses were greatly embarrassed by the 
event. The news was conveyed by a carrier pigeon, which 
was shot by a boy near Brighton. The message was briefly, 



HIS DEATH CREATES A PANIC. 405 

11 est raort — " He is dead." The interests of the house of 
Kothschild are now scattered over the globe, and it is proba- 
ble that the aggregate wealth of all the branches of the 
r firm, including the possessions of the various members of 
their families, exceeds $1,000,000,000. 




sTr^t^KUeAj 



J 



CHAPTEK XXXIX, 

TRAVERS. 

The Unique Chaeacteb of Tea vers— His Versatile At- 
tainments — Although of a Genial and Humorous 
Disposition, He Has Always Been a Bear— How He 
Was the Means of Preserving the Commercial Su- 
premacy of New York — He Squashes the English 
Bravado, and Saves the Oratorical Honor of Our 
Country— Has the Oyster Brains?— It Must Have 
Brains, For it Knows Enough to Sh-sh-shut Up — 
The Dog and the Bat— I D-d-don't Want to Buy 
the D-d-dog; I Will Buy the B -r- rat — Tra vers 
on the Eoyal Stand at the Derby -How He Was 
Euchred by the Pool-Seller— My Proxy in a Speech 
\t the Union Club. — If You are a S-s-self-made Man, 
Wh-wh-y the D -devil Didn't You Put More H hair 
on the Top of Your Head ? Other Witicisms, &c. 

WM. E. TKAVEBS is one of the most notable men of 
Wall Street in our time. 

His success in speculation has usually been on the bear 
side, which is rather singular, as he is a man of such a genial 
disposition, with a kind nature, an inexhaustible supply of 
sparkling wit, and always brimful of humor. 

He is also fond of athletic sports of every description, 
and, in fact, is a kind of universal genius, so various and 
versatile are his attainments. Owing to his immense var- 
iety of qualities, tastes and pursuits, he has one of the most 
remarkable records in Wall Street ; and the most singular 
thing about him, probably, is, that while having all the at- 
tributes usually inherent in a bull, he has always been a 
bear in his transactions. 

This genial, benevolent and high spirited man has never 
been known to believe that there was any value in any 
■oroperty. 

If he ever by chance happened to make any money on 



408 TRAVERS. 

the bull side of the market, it must have made him feel very 
uncomfortable — in fact, conscientiously miserable — as he 
could not realize that by any possibility it belonged to him. 

It is due to Mr. Travers, however, that New York has 
been so highly classified in the catalogue of cities, in fact, 
as occupying the highest position in public estimation, and 
that it has attained full credit for being the largest in wealth 
and population of any city in the Union. This fact, now 
generally admitted, seemed to have been suspended in doubt 
until Mr. Travers came from Baltimore to reside in our 
midst. 

It will be remembered by many Wall Street men that prior 
to the advent of Mr. Travers the rivalry among several of the 
seaboard cities on the Atlantic coast was very keen. Boston, 
Philadelphia and Baltimore were each in turn disposed to 
claim pre-eminence. Thanks to this Wall Street magnate, 
the matter is now no longer in dispute. It was finally decided 
in this way: 

One day after Mr. Travers became one of ourselves, an 
old friend from Baltimoi a met him in Wall Street. As it had 
been a long time since they saw each other, they had a con- 
siderable number of topics to talk over. They had been 
familiar friends in the Monumental City, and were not there- 
fore restrained by the usual social formalities. 

"I notice, Travers," said the Baltimorean, "that you 
stutter a great deal more than when you were in Balti- 
more." 

" W-h-y, y-e-s," replied Mr. Travers, darting a look of 
surprise at his friend; "of course I do. This is a d-d- 
damned sight b-b-bigger city." 

That settled it. Since this famous interview, and this 
scientific explanation given by Mr. Travers to his old friend, 
no skeptic has had sufficient temerity to entertain any doubt 
regarding the financial and commercial supremacy of New 
York; its leading position as the great emporium of the 
Continent has never since been questioned ; and there are 



1 ' SITTING DOWN ' ' ON THE ENGLJSH ORATOR. 409 

few cities outside of Ohio that can claim such power in 
politics. 

It is due to Mr. Travers, also, that this country still re- 
tains the palm for oratory and volubility in speech, and has 
successfully resisted the intrusive and pretentious claims of 
Great Britain in regard to that great and somewhat limited 
accomplishment. 

The destiny of this nation in that respect hung in the 
balance at one time. 

A sort of go-as-you-please oratorical contest was being 
arranged to decide the question of championship between 
Great Britain and ourselves, and a vaunting and loquacious 
Britisher had appeared in our midst to dispute the claim of 
the national cup in oratory as Howell had done for the belt 
in pedestrianism. 

This English bravado had letters of introduction from 
Lord Bandolph Churchill, Sir Charles Dilke, Lord Salisbury, 
Mr.Gladstone, and other British declaimers to Mr. Travers 
and other American gentlemen. It was in the yachting 
season, and the voluble champion was invited to accom- 
pany a party, of which Mr. Travers was the leading spirit, 
down the bay in Mr. Travers' yacht. The orator had 
talked everybody within earshot of his voice almost deaf. 
When the party arrived at the dinner table it was hoped 
that he would cease for a short time ; but when every other 
topic seemed exhausted, as well as the patience of his 
listeners, he started off with renewed fluency on the subject 
of oysters, which constituted the dish then at table. 

" It is now a debatable point among scientists," he began, 
" as to whether or not the oyster has brains." Travers, 
who up to this time had endured the infliction of his loqua- 
cious guest, with the calmness of Job, said, "I think the 
oyster must have b-b-brains because it knows enough when 
to sh-sh-shut up." 

By this satiric stroke the English orator was dumbfounded 
and almost paralyzed ; his fluent tongue ceased to wag with 



410 TRAVERS. 

its usual volubility, aud when requested to name his time 
for the international contest, he begged to be excused until 
cured of his cold. He took the next steamer for Liverpool, 
and has not been heard of since. Mr. Travers' incisive re- 
mark about the mental attributes of the oyster thoroughly 
squashed him, and saved the oratorical honor of our country, 

Mr. Travers started in life in the grocery business in 
Baltimore, but disaster overtaking him there, he came to 
New York, and soon thereafter formed a co-partnership with 
Leonard "W. Jerome, the firm being Travers & Jerome. Mr, 
Travers met with fair prosperity from the start, and soon 
accumulated wealth. The worst set-back probably that he 
ever received during his residence in this city was on one 
occasion on his way home after the business day was over. 
Being attracted by the display in the window of a bird 
fancier and dog dealer, from curiosity he was tempted to 
enter the place. One of the conspicuous objects that met 
his eye was a very large sized parrot. Mr. Travers inquired 
of the proprietor of the establishment who was in attend- 
ance "i-i-if th-th-th-that p p-parrot c-c-could t-t-talk ? " 

Its owner quickly replied, "If it couldn't talk better than 
you, I'd cut its damned head off." 

Mr. Travers for a long time afterwards made up his mind 
some time or other to get even with this dealer in animals 
and birds, and succeeded most effectually. His coachman 
made a complaint to him that the stable was overrun 
with rats. Mr. Travers said, " Well, you m-m-must hunt 
for a r-r-rat dog." The coachman made it known that Mr. 
Travers wanted a dog, and all those engaged dealing in dogs 
overran Mr. Travers' house as ferociously as the rats had 
overrun the stable, to get him to buy a dog. Among the rest 
who responded was this identical man who kept the store 
where the parrot was. Mr. Travers recognized him at once, 
and told him, " I-i-if he w-w-would b-b-b-be d-d-down at 
the s-s-stable in the m-morning with t-th-the d-d-dog, he 
would g-g-give him a tr-tr-trial. and if he p-pr-proved to 
b-b-be a g-g-good r-rat c-c-catcher, would b-b-buy him * 



GETTING EVEN WITH THE DOG FANCIER. 411 

Mr. Travers sent for his coachman and told him to catch 
three or four rats and put them in the bin, and he would be 
down in the morning to try the dog. So, good and early next 
f morning Mr. Travers was on hand at the stable, and also the 
dog man and his terrier. Three rats having already been put 
into the bin, Mr. Travers ordered the dog put inside, as the 
man said he was ready for the fray, and the rats were so 
ferocious, and showed such determined fight, that they kept 
the dog at bay, and he took to the corner of the bin for 
protection. By and by the owner pushed him right on the 
rats, and after a pretty fierce tussel he did secure one of 
them and shook him until dead. This success encouraged a 
tussel with another, which, after a long fight, shared the same 
fate. The third rat, however, was determined to resist the 
dog, and did so nobly and fiercely, making a prolonged fight, 
which resulted in a draw, and it was hard to tell which was 
the worst hurt, the dog or the rat. 

The owner of the dog then turned to Mr. Travers and 
said : " Now you see what a fine dog that is, won't you buy 
him ? " Mr. Travers replied : " I d-d-don' t w-w-want t-t-to 
b-b-buy the d-d-dog, b-b-but I'll b-b-b-buy the r-rat." 

Mr. Travers, when he first saw the owner of this dog, 
remembered him in connection with the parrot. Since the 
rat fight, however, this same man has never ceased to remem- 
ber Mr. Travers, so that honors remain easy between them. 
Mr. Travers has never been known to be at a loss for wit to 
meet an emergency, and it is recognized that it flows as 
freely from his lips and in as perfectly natural a way, as 
ordinary conversation does from most people. 

Early in the Spring of last year, on the advice of his 
physician, Mr. Travers took his maiden trip to Europe, and 
would not have gone but for the urgency of the case, always 
regarding that this country was big enough for him without 
leaving its shores. When he reached England, however, he 
found, when his arrival was announced through the medium 
of the papers, that he was as well known amongst the nobil- 



412 TRAVERS. 

ity, sporting world and other distinguished people there as 
he was in his own country, owing to his connection with the 
turf and athletic sports, together with his widely published 
witticisms which had preceded him. He consequently was 
overpowered by attention and hospitality, and participated 
to as full an extent as his health would permit. He attended 
the Derby, and took an interest in a pool which resulted in 
his favor. As soon as he ascertained his good fortune, he 
went to bag his money, but found that the pool man had 
decamped with the funds. This was a sad disappointment. 
He could scarcely believe his eyes or the various statements 
which went to corroborate this man's disappearance, but it 
was evident that he was non est, as he was nowhere to be 
found about the stand or on the field. Travers made com- 
plaint to a policeman, who appeared perfectly indifferent to 
the charge. Mr. Travers said : " W-w-we d-don't d-d-do 
th-th-that way in m-my c-c-c-country. I b-b-belong to 
America." The policeman turned impertinently and said : 
"You had better go back to your own country, if that's the 
case." This was an indignity to which Mr. Travers did not 
feel inclined to submit, and he at once exhibited his badge, 
which admitted him to the royal stand. The policeman 
recognized it with affright, and almost fell on his knees in 
making profuse apologies and offers of service, showing the 
cringing spirit which prevails in England to royalty and 
nobility, by the people who occupy the position as servants 
to these high-born personages. Mr. Travers overlooked this 
official rudeness, and submitted to his loss as cheerfully as 
possible under the circumstances. 

I met Mr. Travers on board the Newport boat immediately 
on his return, and he told me this story. I replied, " that I 
was surprised that a man of that character should have acted 
so villainously, as I had always supposed that such men were 
influenced by the recognized principle the world over, of 
honor among thieves." Mr. Travers instantly replied : "No 
one could have t-t-told him that I was a th-th-thief." 



WITTICISMS OF TH3 UNION CI.UB. 413 

I rememember another instance, which was during the 
war period. I had written a series of letters on national 
financial matters, which were then before the country for 
discussion, and they were published in the New York Times. 
Mr. Travers was met on his way downtown by a Wall Street 
friend on the morning that one of these letters appeared in 
the paper, who asked Mr. Travers if he had seen Mr. Clews' 
last letter. Mr. Travers said, " I h-h-hope so." 

Shortly after this I was a guest at a dinner party at the 
Union Club, and was late in presenting myself. "When I 
reached the entertainment (which was a sort of mutual 
admiration gathering), the speeches had commenced, and 
I no sooner had taken my seat than Mr. Lawrence 
Jerome proposed my health. While it was being drank, 
Mr. Travers, who sat immediately opposite, came over 
and whispered in my ear, " Clews, you d-d-don't w-want 
t-to speak so soon after c-c-oming in here, d-d-do 
you ?" " No, I do not," I replied. <• I'll t-t-tell th th-them 
so, will I ?" "" Yes, I wish you would," I said. He 
went back to his place and said, " Gentlemen, I have 
talked with Mr. Clews, and he d-d-desires me t-to ask you 
t-to excuse himf-from making a speech on th-th-this occa- 
sion and i-if you w-will d-d-do so, he w-will w-write you a 
1-letter." 

To show the rapid fluctuations that take place in Wall 
Street, and how even the best judges of the market are often 
mistaken in their prognostications, I will note an instance in 
connection with Mr. Travers. On his return from Europe, 
which was early in July, 1885, when the market on this side 
was weak, cables prior to his departure evidently indicated 
to him that much lower figures were in order. Just prior 
to the arrival of the steamer, in conversing with an asso- 
ciate member of the Exchange, he said, " B-b-barnes, I'll 
make a 1-1— little b-b-bet with you ; I'll b-b-bet you L-l- 
lackawanna will b-b-be under six-ty when we r-reach New 
Y-York.'' Barnes was not willing to make the bet, how- 



414 TRAVERS. 

ever, but on their arrival, which Was two days after, nothing 
surprised Mr. Travers so much as to .find Lackawanna 110 
instead of the figure 60 or less which he had predicted, 
especially as its advance did not cease thereafter until it 
sold at 130. 

It has been justly said, that if a man will wear a good 
looking hat, and good, well polished boots, the head and feet 
being the parts which first catch the eye of an observer, it 
matters very little what kind of material the coat, vest and 
trousers may be made of, if they are whole and kept clean. 
Though they may be threadbare the man will appear to be 
fairly dressed, and will look much younger than if he were 
careless regarding the covering of his extremities. If the 
latter are fairly adorned he can pass muster. 

Knowing this fact, I had always been in the habit of posing 
before the public as a youth. In this I was materially 
assisted by having no hair on the top of my head, in the 
place where other people's hair usually grows. I had been 
this way for twenty years, just presenting about the same 
appearance as when I was born, and it has always been a 
matter of remark how youthful I looked. 

I have often been asked what I did to keep myself look- 
ing so young. My truthful answer always has been that, 
" Virtue is its own reward." This theory invariably passed 
as sound in my case until it was knocked into a cocked hat 
by Travers. One unlucky day he removed the mask, and 
changed the current of public opinion against me on the 
much cherished subject of my perpetual bloom of youth. 

It occurred in this way. Frank Leslie's Illustrated Weekly 
had published a number of pictures of the active business 
men of New York, who were known in the community as 
self-made men, and mine was among them. 

A few days after the appearance of my picture in this 
paper, I happened, one afternoon, on my way uptown, to 
drop into the Union Club, and as usual, went into the main 
room. It was full of members, largely composed of a scat- 
tering of Wall Street bankers and brokers. 



EXPOSING A DEARI.Y CHERISHED SECRET. 415 

Travers was present, and when he is on hand on such oc 

casions, it always means laughter for the multitude at some 

one s expense. In this instance it happened to be at mine 

As 1 1 entered the room, Travers said, in an audible voice: 

ilalio, boys ! here comes Clews, the self-made man " Then 

addressing himself to me, he said : "I s-s-say, Cl-Cl-Clews' 

as you are a s-s-self-made man, wh-wh-why the d-d-devil 

didn t you p-put more h-h-hair on the top of your head ?" 

This story having gone the rounds, as it soon did drew 

attention to my summer-appareled head, which before that 

time had enabled me to pass myself off as a youngster just 

striking out at the commencement of life. That stroke of 

Travers' wit, however, has been the cause of consigning me 

ever since to the ranks of the old « fogies." Now, everybody 

is convinced that my hair, now m est, had already come 

and gone, and that my head represents the work of ages 

This is another vivid instance illustrating the saying that 
'many a truth is spoken in jest." 

When Travers thus removed my mask of adolescence, it 
made me feel unhappy for some time, as it really trans- 
formed my entire identity, and deprived me of that luxury 
so dear to all the fair sex, and to many of my own, of sail- 
ing under false colors in reference to my age 

Still, as Travers is such a righteous, good "fellow, I have 
had to forgive him, notwithstanding the gravity of the 
offense in having hurt the most tender part of my sensitive 
nature So we can make up and become friends again, as I 
value the renewal of his friendship even at the cost of such 

^utltfn™ SaCrifiCe " tLe d6PriVati0n ° f ** SU PP° Sed 
On the principle that misery loves company, and as Mr 
Travers had brought misery to my lot by drawing public 
attention to my bare head, I found consolation, shortly after- 
wards, in a huge joke that the same facetious individual per- 
petrated upon another member of the Club, who happened 
to be one of New York's most celebrated lawyers This 



413 TRAVERS. 

gentleman, it is well known, has been connected with some 
of the largest and most remunerative railroad cases in our 
courts for many years, and being considered a great authority 
in that branch of legal lore, he was accustomed to exact his 
own terms from his wealthy clients, which meant, in most 
instances, a very fat fee. This gentleman was standing on 
the side of the street opposite the Club one afternoon, while 
Travers was surrounded by a cluster of club men on the 
other side. " Look across the way, boys," observed Travers, 
" th-th-there's B-B- Barlow with his hands in his own p-p- 
pockets at last." 

On another occasion, when Travers, who resides at New- 
port in the summer, and is the possessor of a small sized 
yacht there, which he obtained some years ago in lieu of a 
debt, was taking a refreshing sail on his yacht in the bay 
one morning, it happened that a squadron of yachts appeared 
in hi3 vicinity, and there was going to be a race. Travers 
having been made acquainted with the fact, invited a party 
of friends to go to see the race. As soon as it became known 
to the yachtsmen that the renowned Travers had appeared 
on the deck of his yacht, a committee was assigned to con- 
vey to him the respects of the members of the squadron. 
When they came alongside his craft he invited them on 
board, and saw at a glance that they nearly all happened to 
be bankers and brokers. Casting his eyes across the glitter- 
ing water, he beheld a number of beautiful white-winged 
yachts in the distance, and finding, by inquiry, that they all 
belonged to Wall Street well known brokers, he appeared 
thereby to be thrown momentarily into a deep reverie, and, 
without turning his gaze from the handsome squadron, 
finally asked his distinguished visitors, " wh-wh- where are 
the cu-cu-customers' yachts ?" 

Comment would be entirely superfluous. 

A. T. Stewart, the world renowned retail dry goods mer- 
chant, was elected, on one occasion, to preside at a meeting 
of citizens during the war period, Travers being amongst the 



A HARD HIT AGAINST A. T. STKWART. 417 

cumber present. "When Mr. Stewart took his gold pencil 
case from his pocket and rapped with its head on the table 
for the meeting to come to order, Travers called out, in an 
audible tone, " C-cash ! " which brought down the house, 
and no one laughed more heartily than Mr. Stewart, although 
it was a severe thrust at himself. 

As it is sometimes said of a stranger who comes from a 
foreign country, Travers came to New York well recom- 
mended, bringing letters of introduction with him from the 
first families of Baltimore, and credentials which at once 
established his status and reputation. So it was not neces- 
sary for him to remain long on probation in New York. 
Coming here was not a new birth to him, although, in some 
measure, he may be said to have risen, Phoenix-like, from 
the ashes of his former self, as business misfortunes had 
overtaken him in Baltimore. 

Travers had not only to sfort in a new place and in a new 
business when he came here, but he had to begin the ascent 
of his prosperous career at the very bottom of the financial 
ladder. Owing to his incomparable geniality he met with 
hosts of friends from the very start, and he prospered from 
the word " go." 

Travers formed several partnerships at various times. 
After making considerable money in the one above alluded 
to with Mr. Jerome, the partnership was dissolved, and 
Travers then continued business alone as a Wall Street 
operator, and as I have formerly stated, usually acted on 
the bear side of the market, which was remarkable for a 
person of such a buoyant and hopeful disposition. 

In his business operations Mr. Travers has always shown 
great sagacity, mingled with caution, and his prestige as a 
leader became so great that he soon attracted a numerous 
following of operators, who, with their eminent leader, 
formed a set widely known in speculative circles all over 
this country as the " Twenty-third Street Party." Of this 
party, Mr. Addison Cammack, the celebrated bear, was a 
prominent member, and a great admirer of Mr. Travers. 



418 TRAVERS. 

Mr. Travers was well-born and received a good education, 
with an excellent training for a business career. He mar- 
ried a daughter of the Hon. Beverdy Johnson, who was 
United States Minister to England during the administra- 
tion of Andrew Johnson, aud who was one of the most 
prominent members of the Bar. 

Mr. Travers has always been famous for his attachment to 
out door sports and amusements, and on the principle that 
water finds its level, so did Mr. Travers in the sporting 
world. He soon became President of the Jerome Jockey 
Club, President of the Eacquet Club, President of the Ath- 
letic Club, and was thoroughly identified as a leader in 
the large majority of manly and out-door sports, in which 
the youth of New York city and its suburbs were inter- 
ested. 

It is due both to Mr. Travers and his quondam partner, 
the renowned Leonard W. Jerome, to state that the efforts 
of these two men have been chiefly instrumental in ele- 
vating the social and moral tone of the race-course in this 
part of the country, and raising it to a standard of re- 
spectability, to which before their reformatory efforts it 
was partially a stranger. It was, in a great measure, 
through their exertions that the race- track became a fash- 
ionable resort, in the North, for ladies, as it had been in the 
South for many years, especially in Kentucky. The ladies 
of the present day can now talk horse at Jerome Park, 
Sheepshead Bay and Long Branch with a volubility that 
twenty years ago would have shocked their mothers, and 
would still cause their grandmothers to have epileptic fits. 
So the ladies of the present generation are greatly indebted 
to these two gentlemen for having removed the social stigma 
from the turf, in this section, thus enabling the fair sex to 
enjoy, in common with the lords of creation, and without 
compunction and loss of dignity, one of the greatest pleas- 
ures in the whole range of out-door recreations. 

The breed of horses has been improved to an extent that 



ONE OF HIS BEST BON MOTS. 419 

leaves the famous Arabian steed of yore, that outstripped 
the flight of the ostrich, far in the distance. This develop- 
ment in speed has been brought to its highest pitch in 
Harry Basse tt, and "Wm. H. Vanderbilt's fondly cherished 
Maud S., now the property of Mr. Eobert Bonner. For this 
immense evolution in speed and staying powers the patrons 
of the turf are largely indebted to Jerome and Tr avers. 

One of Travers' best bon mots was inspired by the sight 
of the Siamese Twins. After carefully examining the 
mysterious ligature that had bound them together from 
birth, he looked up blankly at them and said, "B-b-br- 
brothers, I presume." 

Among Travers' contemporaries, Mr. Charles L. Frost 
was very well known a few years ago. His specialty was 
purchasing the junior securities of foreclosed railroads which 
were supposed to be wiped out, so far as any visible element 
of value was concerned. 

Then, at a time when it was quite inconvenient for the re- 
organized companies, he would pounce down upon them 
with some sort of vexatious litigation, and would often levy 
oa the bank balances of these corporations as a part of his 
proceedings and peculiar methods of management. He 
was enabled to take such action as they were foreign corpor- 
ations. In this way he made it exceedingly difficult for 
these corporations to defend the various suits in law en- 
gineered by him, and rendered their existence exceedingly 
uncomfortable by placing their money in a tight place and 
cutting off the interest. 

These peculiar methods of financiering identified Mr. 
Frost in a measure with Wall Street men, as a character 
whom most of the bankers and brokers who had any deal- 
ings with him have had good reason to remember feelingly. 
Frost had bushy, white curly hair, a beardless, full face, and 
a very red nose, which could only be acquired at consider- 
able expense or as the result of chronic dyspepsia. There 
is no evidence, however, that he was a victim of this natural 



420 TRAVERS. 

malady, so his highly colored proboscis must be accounted 
for in some other way. 

Mr. Travers met this gentleman one morning by accident 
in a Fourth Avenue railroad car going down town. Although 
formerly acquainted, they had not met in years, and time, as 
indicated by his white locks, was beginning to tell upon Mr- 
Frost. 

This attracted the attention of Mr. Travers, who cordially 
shook hands with the old gentleman, and after making a 
rapid survey of his person, said, " Wh-why, Mr. Frost, wh- 
wh-what beautiful white hair you have ; what a su-su- 
superb blue n-n-necktie yon wear ; what a m-m-mag- 
magnificent red nose you have got. If I had s-s-seen you 
as I do now in w-w-war times, I should have taken you 
for a p-p-perfect p-p -patriot, red white and blue." 

The Death op Tea vers. 

The foregoing reminiscences of Travers were written and 
stereotyped while the great wit and financier was still alive. 
I have, therefore, not deemed it necessary to recast the 
matter, but consider it sufficient to add a few of the salient 
points in Mr. Travers' character and career, with more bons 
mots which the death of this popular man brought out. He 
died in Bermuda, March 19, 1887. He had gone there in 
the previous November, where he had a residence of his 
own, in the hope that the climate might restore him to 
health, but the malady, diabetes, had got too far ahead, 
and, in spite of the best medical skill, carried him over to 
the majority. His wit, like that of Tom Hood, did not for- 
sake him even in his last hours. 

While on his death-bed at Bermuda a friend called to see 
him, and said . "What a nice place Bermuda is for rest and 
change." Travers replied : " T-y-yes, th-the waiters g-g-get 
th-th-the ch-change and th-the h-h-hotel k-k-keeper« 
th-the r-r-rest." 



ADDITIONAL BON MOTS. 421 

Among Travers' famous hits the following is one of the 
best : Jim Fisk's zenith of glory and grandeur was in the 
vicinity of its height when he secured the control of the Bos- 
ton & Providence line of steamboats. He constituted him- 
self Commodore, and was always on the deck as they de- 
parted each day, dressed in a Commodore's attire, and was 
evidently very much elated in being supreme in command 
in connection with these magnificent steamboats. Jay Gould 
was, financially, equally interested with him in the venture, 
and Commodore Fisk, in his usual splurgy manner, had a 
large likeness of both Gould and himself hung up at the 
head of the stairs leading to the large saloon cabin on each 
of these steamboats. Travers and others, who at that time 
were leading magnates of the street, were invited to inspect 
one of these large boats that had been newly fitted up, 
gilded, and put in magnificent shape, with a band of music 
on board, etc. Fisk met Travers as he went on board, 
and volunteered to escort him over the boat to show him 
its magnificence and superb appointments. As they went 
up the stairs and came to the first landing, he pointed out 
the likenesses of Fisk and Gould that were hung there, 
and asked Travers if he didn't think they were good. 
Travers replied : " I th-think th-th-they are v-v-very good, 
b-b-b-but t-to m-make th-th-them c-c-complete, th-there 
sh-sh-should b-b-be a p-p-picture of our S-S-S-Saviour 
in th-th~the m-middle." 

The last time I saw Mr. Travers down town he called at 
my office. After he ran his eye over the stock quotations, 
I said : " The market is pretty stiff, Travers." He said : 
" Y-yes, it is th-the st-st-stiffness of d-d-death ;" and, sure 
enough, in the course of two or three days afterwards, a big 
smash took place." 

Mr. Travers once said to a friend : " O-come and see me 
in S-September. If j -you wish I will give you a p-point 
that will m-make m-money. He wished to do the man a 



422 TRAVKRS. 

favor in return for a kindly office. Late in the montL menr 
tioned the friend dropped into Travers' office. 

" O-come for that p-point ?" asked Mr. Travers. 

"Certainly,'' replied the friend. 

" Well, y-you are the luckiest d-dog I know. I p-played 
that p-point two weeks ago myself and lost a pile of money. 
Y-you st-stick to m-me 1-long enough and c-close enougk, 
and Fll 1-land y-you in the p-poorhouse, sure." 

When " Plunger' * Walton was in the height of his prosper- 
ity on the turf he met Travers at Saratoga. 

li I have been anxious to see you for some time, 55 said 
Walton. "I think we can do business together," he added. 
" Fve got good judgment on horses and horse racing, and 
you have the same on stocks and stock speculation. I've 
made $350,000 on horse races in the last two years. Now, 
you give me points on stocks, and I'll give you points on 
races. Is it a go % 

"Y-you've made three h-hundred and f -fifty th-thousand 
dollars on h-horse racing ?" Travers repeated. 

"Yes." 

"And you want m-me to g-give you p-points on st- 
stocks r 

u In exchange for my points on horses. Yes.'' 

" Well, I'll give you a f-first rate p-point. If you've made 
that much in two y-years, st-stick to your b-b-business. 
It is a f-first-rate p point.'' 

One day, many years ago, Mr. Travers was standing on 
the curb of New street, opposite the Exchange, buying 
some stock from a gentleman whose aspect was unmistak- 
ably of the Hebrew stamp. 

" Wh-wh-what is your name f asked Travers. 

"Jacobs," responded the seller. 

" B-b-but wh- what is your Christian name ?" reiterated 
Travers. 

The Hebrew was non-plussed, and the crowd was con- 
vulsed with laughter. 



THE SOCIAL PRIDE OF HIS LIFE. 423 

The first time Mr. Travers attempted to find Montague 
street, in Brooklyn, he lost his way, although he was near 
the place. Meeting a man he said : 

" I desire to r-reach M-montague st-street. W-will you 
b-be kik-kind enough to pup-point the way V 9 

" Tou-you are go-going the wrong w-way," was the stam- 
mering answer. " That is M-montague st-street there." 

" Are y-you mimick-mimicking me, making fun of me- 
me ?" asked Mr. Travers sharply. 

" Nun- no, I assure you, sir," the other replied. u I- 1 am 
ba-badly af-flict-flicted with an imp-impediment in my 
speech." 

"Why do-don't y-you g-get cured?" asked Travers, 

solemnly. " G-go to Doctor , and y -you'll get c-cured. 

D-don't y-you see how well I talk ? H-he cu-cured me." 

The fortune left by Mr. Travers has been estimated at 
$3,000,000. He left three sons, William E. Travers, John 
Travers, and Eeverdy Travers. and five daughters, four of 
whom are married. His only sister is Mrs. Prince, mother 
of the late John D. Prince, of Prince & Whitely. 

Mr. Travers assisted a large number of young men to go 
into business, and helped to give the start in life to several 
of the most successful men in Wall Street. 

He was charitable, and his secret beneficences are said 
to have been numerous. He enjoyed the wealth he had 
made in a way that should make the majority of mil- 
lionaires blush with shame at their parsimony. He was a 
Ion vivant of the first water. He maintained five domestic 
establishments on a first-class and luxurious scale, not like 
a Caligula, merely for his personal gratification or the 
pride of ostentation, but rather for the development of those 
social traits of character in which he had few equals, and 
no superior. The great social pride of his life was to make 
his friends feel happy. He had one of the best cellars in 
New York. His table at any of his residences was not 
only bountiful, but exhibited a menu equal to that at Del- 



424 TRAVERS. 

monico's. His favorite wine was Madeira, of which he was 
a perfect judge. He was very moderate, however, both in 
eating and drink, but would have the best of everything 
despite the cost. 

He was a kind and indulgent father, but was pleased to 
see his boys manifest ample pluck like himself. Apropos of 
this characteristic, one of his boys came home one day with 
a big blackened eye. 

"W-w-w-where d-d-did you g-g-g-get th-th-that?" 
inquired the father, anxiously. 

" In a f-f -fight, sir," replied the son, who has a similar 
impediment in his speech. 

"D-d-d-did y-y-you w- w-w~whip the other f-f-fellow V y 

"Y-y-yes, sir." 

"Q-q-q-quite r-r-right H-h-h-here's a d-d- dollar 
f-f-for y-you. Always w-w-whip the other f-f-fellow." 

Travers himself was courageous, tall, and sinewy, and in 
his younger days a great athlete. He was 68 years of age 
at the time of his death. He was a member of twenty-seven 
clubs, social, political, and athletic. He was a Democrat 
in politics. As to his religious belief, I expect if he had 
been questioned on that he would have given the same 
answer as another eminent man who cut a great figure in 
this country : "The world is my country ; to do good is 
my religion." Travers might have added : " I also wish to 
be the means of creating and diffusing the greatest amount 
of social happiness and enjoyment of which humanity is 
capable." 

I may conclude by saying of Travers, as an eminent 
author observed of his namesake the divine William, the 
$ard of Avon, " We ne'er shall see his like again." 



CHAPTEK XL. 

CHARLES F. W0ER1SH0FFER. 

The Career of Charles F. Woerishoffer, and the Be- 
sultant Effect upon Succeeding Generations.— The 
Peculiar Power of the Great Leader of the Bear 
Element in Wall Street. — His Methods as Com- 
pared with Those Other Wreckers of Values. — A 
Bismarck Idea of Aggressiveness the Euling Ele- 
ment of His Business Life.— His Grand Attack on 

THE VlLLARD PROPERTIES, AND THE CONSEQUENCE 

Thereof.— His Benefactions to Faithful Friends. 

BY the death of Charles F. Woerishoffer, Wall Street 
lost one of the most prominent figures which has ever 
shown up here. Mr. Woerishoffer died May 9," 1886. His 
career is one worthy of study by watchers of the course of 
speculation in this or any other country. The results of 
his life-work show what can be accomplished by any man 
who sets himself at work upon an idea, and who devotes 
himself steadily and persistently to a course of action for 
the development and perfection of the principle which ac- 
tuates his life. Mr. Woerishoffer possessed peculiar per- 
sonal qualities which are denied to most men and to ah 
women. He had the magnetic power of impressing people 
with confidence in the schemes which he inaugurated ; that 
is to say, he had the power of organization — the same 
power has made other men great, and will continue to make 
men great who possess it in all walks of life. Notable in- 
stances may be cited in the cases of Bismarck, Gladstone, 
Napoleon, Grant, and — coming down to Wall Street proper 
— Gould, Daniel Drew, old Jacob Little and the Yanderbilts, 
especially the Commodore, in his superior power of aggres- 
siveness. 

It has been said of Mr. Woerishoffer that he was fortu- 
nate. He was indeed. He was fortunate in the possession 



426 CHARLES WOERISHOFFER. 

of natural ability, and he had the aptitude to take advantage 
of events, and associate circumstances and the strength of 
purpose, and to direct, instead of following, the operations 
with which he became connected. He was the leader of the 
bear element of the Street — at least he was such during the 
period which marks his successful operations here. There ia 
no doubt that the death of Mr.Woerishoffer was hastened be 
cause of the great strain of mind growing out of his business 
transactions. There is one point in this connection which 
has been overlooked by his biographers, namely, that his 
boldness in the magnitude of his dealings was resultant 
from a careless or non-calculative mind. I do not believe 
that Mr. Woerishofler ever undertook a speculation of any 
sort until he had carefully calculated all the chances pro and 
con, and his success, remarkable as it was, was largely due 
to the combination of calculation and the natural develop - 
ment of business conditions, of which he was a close 
student. 

Mr. Woerishoffer's conception of business principles 
was iconoclastic to an intense degree. As a broker, as a 
business man, as an operator in stocks, he " believed in 
nothing ;" that is to say, he was a believer in the failures of 
men, and had no faith in the corporations and enterprises 
which were organized for the purpose of the development of 
the best interests of the country in which he lived. There 
is another view, or another statement of this peculiar 
feature, of the character of this man which may be given 
in description, and this is illustrative of the careful study 
he made of everything passing along in the lines of life 
with which he was connected. It is this : That Mr. Woer- 
ishoffer, by his intimate study of the prospects and proba- 
bilities of the projected plans of enterprising Americans, 
had come to the conclusion that the majority of them must 
fail, and that the first flush of enterprise would be changed 
to a darker shade as time progressed. That is to say, he 
saw and knew a great deal of the organization of the rail- 



HIS SUDDEN RISE AND RAPID PROGRESS. 427 

road schemes which have marked the growth of our rapid 
development in a business way, and he judged that the in- 
flated ideas of the projectors must meet with a check as 
developments were made, and that the earning capacity of 
the roads would not equal expectations. Hence he sold the 
stocks, and sold them right and left from the start, and with 
his followers reaped the profits. Woerishoffer never in- 
dulged in the finesse of Gould or Henry N. Smith. He had 
the German ideas of open fight, and he attacked everything 
indiscriminately, losing money sometimes, but making 
money at other times, and by his open dash and persistency 
carried his point. 

There is no doubt that the successful career of a man of 
this sort has a deleterious effect upon those who follow him 
in succeeding generations. It does not matter how success- 
ful the development of the business industries of this coun- 
try may be hereafter, there will always be found men who 
will speculate upon the ruination rather than the success of 
the best interests of the country merely because Charles F. 
Woerishoffer lived and made a fortune by his disbelief and 
his disregard of the growth of the institutions of the coun- 
try which gave him a home. 

Woerishoffer was a wonderful example of the sudden rise 
and steady and rapid progress of a man of strong and tena- 
cious purpose, who adheres with firmness to one line of 
action or business. He was born in Germany. Woeri- 
shoffer's Wall Street career was begun in the office of August 
Eutten, afterwards of the firm of Butten & Bond, in which 
Woerishoffer subsequently became Cashier He left this 
firm in 1867, and joined M. C. Klingenfeldt. Mr. Budge, of 
the firm of Budge, Schutze & Co., in 1868, bought him a 
seat in the Stock Exchange. Some time after he entered the 
Board he became acquainted with Mr. Plaat, of the well- 
known banking firm of L. Von Hoffman & Co. Mr. Woeri- 
shoffer was entrusted with the execution of large orders, 
especially in gold and Government bonds. At that tim& 



42b CHARGES F. WOKRISHOFFKR. 

the trading in these securities was very large. Afterwards 
Plaat became an operator himself , and Woerishoffer followed 
in his footsteps as an apt pupil. Eventually he formed the 
firm of Woerishoffer & Co., his first partners being Messrs. 
Schromberg and Schuyler, who made fortunes and retired. 

Woerishoffer was connected in enormous operations with 
some of the magnates of the street ; for instance, James II 
Keene, Henry N. Smith, D. P. Morgan, Henry Villard, 
Charles J. Osborn, S. V. White, Addison Cammack, and last, 
though not least, Jay Gould. He was especially on intimate 
terms with his great brother bear, Addison Cammack, both 
speculatively and socially. Besides being a bold operator 
in the street, Woerishoffer was associated with large railroad 
schemes, which gave him the inside track in speculation. 
He was connected with the North Eiver Construction Com- 
pany, the Northern Pacific, Ontario & Western, West Shore, 
Denver & Eio Grande, Mexican National, several of the St. 
Louis Companies^ and Oregon Transcontinental. He was 
originally a rampant bull on these properties until they 
began to get into trouble, and then he became a furious and 
unrelenting bear. He smashed and hammered them down 
right and left. He soon covered his losses, and began to 
make enormous profits on the short side of the market. On 
the bonds and stock of the Kansas Pacific, when it became 
merged in the Union Pacific, it is supposed that Woeri- 
shoffer cleared over a million dollars. 

Woerishoffer, it seems, was one of the first to propose 
the building of the Denver & Eio Grande Eailroad. On 
this enterprise he realized immense profits for himself and 
his friends. The stock rose until it reached 110, and was 
" puffed " up for higher figures. The public was attracted 
by the brilliant prospects of immense profits on the 
long side. Mr. Woerishoffer and friends held large 
quantities of long stock, but sold out, and afterwards put 
out a large line of shorts. The bear campaign had 
Woerishoffer as leader, and, it i3 said, he succeeded in 



he "euchres" gouu) and sage. 429 

cohering as far down as 40, and some even lower. In 1878> 
when the market began its great boom on account of the re - 
sumption of specie payment and the general prosperity of 
the country, he organized a combination which bought 
stocks largely and sold wheat short. On this deal he made 
large profits, and began to develope into a pretty strong 
millionaire. He took advantage of the shooting of Presi- 
dent Garfield, in 1881, together with his colleagues, Cam- 
mack and Smith, to organize a bear raid on a large scale, 
which was probably one of the chief, although somewhat 
remote, causes of bringing about the panic of 1884. 

The great perspicacity which he had in the deals en- 
umerated failed him in 1885. He thought, as the wheat 
crop was small, that wheat would go up and stocks would go 
down, but the very reverse occurred. The disappointment 
and depression, very probably, resulting from this brought 
on the aneurism of the heart, which killed the great bear 
operator, and his death was a fortunate event for Wall 
Street. 

One of the many things which gave WoerishofTer great 
reputation as a speculator, both here and in Germany and 
England, was the bold stand he took in the fight for the 
control of Kansas Pacific against Jay Gould, Eussell Sage, 
and other capitalists, railroad magnates and financiers in 
1879. He represented the Frankfort investors, and had 
engaged to sell a large quantity of Denver extension bonds 
at 80, to the Gould-Sage syndicate. The syndicate, how- 
ever, knowing that they had the controlling influence, 
declared the contract for 80 off, and "came to the conclusion, 
after examining the road-bed, that the bonds were not worth 
more than 70," and they would not take them at a higher 
figure. Woerishoffer then made a grand flank movement on 
the little Napoleon of finance and his able lieutenants. He 
seemed to be greatly put out that they had broken their 
contract, but did not complain very bitterly. He immediately 
cabled to the English and German bondholders, and soon 



430 CHARGES F. WOERISHOFFER. 

secured a majority of the bonds which the syndicate wanted, 
and deposited them in the United States Trust Company. 
He then informed the syndicate that they could not obtain 
a single bond under par to carry out their great foreclosure 
scheme. It was this circumstance that caused Frankfort 
speculators and investors to come so largely into the New 
York stock market, and that also made English capital flow 
in freely, speculators throwing off their former timidity. 
The amount involved in the Gould- Sage syndicate deal was 
about $6,000,000 of bonds, thus netting Woerishoffer consid- 
erably over a million. This deal at once gave him an interna- 
tional reputation as a far-sighted speculator, and this repu- 
tation was gained at the expense of Gould and Sage, owing 
to their disregard of the contract which had been entered 
into. 

Woerishoffer showed great sagacity as a speculator when 
Henry Villard put forward his immense bubble scheme in 
Northern Pacific and the Oregons. Although invited to go 
into the big deal with other millionaire speculators who had 
taken the Yillard bait so freely, "Woerishoffer kept prudently 
aloof, and looked on the players at the Yillard checkerboard 
with equanimity and at a safe distance. He was not then 
considered of very much account by the men of ample means 
who so freely subscribed $20,000,000 to the Villard bubble. 
At the moment when these subscribers were so highly elated 
with the idea that the Villard fancies were going far up into 
the hundreds and, perhaps, the thousands, like the bonanzas 
during the California craze, Woerishoffer boldly sold the 
whole line " short." This was a similar stroke of daring to 
that which James B. Keene had perpetrated on the bonanza 
kings in the height of their greatest power and anticipations. 
The Villard syndicate determined to squeeze Woerishoffer 
out entirely, and for this purpose a syndicate was formed to 
buy 100,000 shares of stock. There were various millionaires 
and prominent financiers included in the syndicate. These 
were the financial powers with which Woerishoffer, small in 



HE OVERTHROWS THE VHXARB SYNDICATE. 431 

comparison, liad to contend single-handed. The feat that 
Napoleon performed at Lodi, with his five generals behind 
him, spiking the Austrian guns which were defended by 
several regiments, was but a moderate effort in war compared 
with that which Woerishoffer was called upon to achieve in 
speculation. He took things very coolly, and with evident 
unconcern watched the actions of the syndicate. The latter 
went to work vigorously, and soon obtained 20,000 shares of 
the stock which they required. It still kept climbing rapidly, 
and so elated was this speculative syndicate with the success 
of its plans that it clamored for the additional 80,000 shares, 
according to the resolution. The speculators thought they 
were now in the fair way of crushing Woerishoffer, and with 
a hurrah obtained the 80,000 shares required, but Woerish- 
offer's brokers were the men who sold them to the big syndi- 
cate. It was not long afterwards that the syndicate felt as 
if it had been struck by lightning. In a short time the Vil- 
lard fancies began to tumble. The syndicate was in a 
quandary, but nothing could be done. It had tried to crush 
Woerishoffer. He owed it no mercy. The inevitable laws 
of speculation had to take their course, and the great little 
bear netted millions of dollars. These events occurred in 
1883. 

After the Villard disruption, Mr. Woerishoffer became 
conservative for some time, and was a bull or a bear just as 
he saw the opportunity to make money. When the West 
Shore settlement took place he watched the course of 
events with a keen eye, and was one of the most prominent 
figures in pushing the upward movement upon the strength 
of that settlement. His profits on the bull side then were 
immense. After this he became a chronic and most de- 
structive bear. The reason he assigned for his conversion 
and change of base was that the net earnings of the rail- 
roads were decreasing, and did not justify an advance in 
prices. He pushed his theory to an extreme, making little 
or no allowance for the recuperative powers of the country, 



432 CHARGES F. WOERISHOFFER. 

and the large bear contingent, which he successfully led, 
seemed to be inspired with his opinions. These opinions, 
pushed to the extreme, as they were, had a very demoraliz- 
ing effect upon the stock market, and constituted a potent 
factor in the depreciation of all values, throwing a depress- 
ing influence on speculation, from which it did not recover 
until many months after Mr. Woerishoffer' s death. The 
great bear had wonderful skill in putting other operators off 
the track of his operations by employing a large number of 
brokers, and by changing his brokers and his base of action 
so often that speculators were all at sea regarding what he 
was going to do, and waiting in anxiety for the next move. 
It was considered remarkable at the time that his death had 
not a greater influence on the stock market than this result 
proved. If he had died a week sooner, his death might 
have created a panic, for he was then short of 200,000 
shares of stock. His short accounts had all been covered 
before the announcement of his death on the Stock Ex- 
change. 

Woerishoffer was almost as famous for his generosity as 
James B. Keene. It is said that he made presents to faith- 
ful brokers of over twenty seats, of the value of $25,000 
each, in the Stock Exchange. He made a present of a $500 
horse to the cabman who drove him daily to and from his 
office. He was exceedingly generous with his employes. A 
short time before his death, feeling that the strain from over- 
mental exertion was beginning to tell on his constitution, he 
had resolved to visit Europe for the purpose of recuperating, 
but, like most of our great operators, he had stretched the 
mental cords too far before making this prudent resolve, 
and he died at the early age of 43. How many valuable 
lives would be prolonged if they would take needful rest in 
time ! The death of Woerishoffer should be a solemn warn- 
ing to Wall Street men who are anxious to heap up wealth 
too rapidly. His fortune has been variously estimated at 
from $1,000,000 to $4,000,000. He left a widow and two 
little daughters. 



HIS GENIUS FOR SPECULATION. 43d 

Woerishoffer liad simply the genius for speculation which 
is uncontrollable, irrespective of consequences to others. 
He had no intention of hurting anybody, but his methods 
had the effect of bringing others to ruin all the same. He 
merely followed the bent of his genius by making money 
within the limits of the law, and did not care who suffered 
through his operations. All speculation on the bear side 
involves the same principle. If there is any difference 
among speculators, it only consists in degree. Large trans- 
actions, like those in which Woerishoffer was engaged, are 
more severely felt by those who have the misfortune to get 
" squeezed ;" but it all resolves itself into a question of the 
survival of the fittest. 

Woerishoffer's success in this country seems strange to 
Americans, but how much stranger it must have seemed to 
the people of his native town of Henau Hesse-Nassau, where 
he was born in 1843, in comparative poverty. John Jacob 
Astor was one of the first of a considerable number of Ger- 
mans to find this country a veritable new El Dorado, where 
peasants' sons, as if my magic, became far wealthier than 
many of the nobility whom they had, as boys, gazed upon 
with awe. Who could have foreseen such a career for the 
poor young German, who came to New York in 1864 ? He 
was then in his twenty-first year. He had had some experi- 
ence in the brokerage business in Frankfort and Paris, but 
he came here poor. Addison Cammack, who was to become 
his ally in many a gigantic speculation, was then prominent 
in the South, where he had favored the cause of the people 
of his State during the war, and had made a fortune. D. P. 
Morgan, who was to be another of his speculative associates, 
had already won a fortune by speculating in cotton m 
London. Russell Sage counted his wealth by the millions. 
Jay Gould and Henry N. Smith had gone through the fever- 
ish excitement of a Black Friday, and either, in common 
parlance, could have " bought or sold " the poor young Ger- 
man. Nevertheless, by strange turns in the wheel of fortius 



434 CHARGES F. WOERISHOFFER. 

he acquired a financial prestige that enabled him to beard 
the lion in his den, and snap his fingers at powerful com- 
binations that sought to ruin him. When Henry Yillard 
demanded his resignation as a director in the Oregon Trans- 
continental Company, on the ground that he had been selling 
the Yillard properties short, the " Baron " (as Woerishoffer 
was often called) tendered it at once, and flung down the 
gage of battle in the announcement that he would ruin the 
head of the Villard system. 

Chas. F. Woerishoffer was slightly built, had a light com- 
plexion, was under the medium height, and, on the street, 
might have been taken for a bank clerk. He showed his 
inborn love of gaming in many ways. He is said to have 
broken a faro bank at Long Branch twice ; he would play at 
roulette and poker for large stakes. He was kind-hearted 
and charitable. At Christmas his benefactions to clerks 
and messenger boys were notable. In the height of a great 
speculation he sometimes showed extreme nervousness, but 
during the memorable contest with the Villard party he 
exhibited the greatest coolness and composure. He was a 
curious compound of German phlegm and American nervous- 
ness. One of the fortunate events in his career was his mar- 
riage, in 1875, with Miss Annie Uhl, the step- daughter of 
Oswald Ottendorfer, the editor and proprietor of the great 
German organ of New York, the Staats Zeitung, who brought 
him, it was understood, a fortune of about three hundred 
thousand dollars. 

The following circular to my customers, which I published 
May 13th, 1886, with special reference to the death of 
Woerishoffer, and its consequences, I think is worthy of 
reproduction here : 

"The future of the market is going to be a natural one, 
and will go up and down from natural causes ; when this is 
fully realized there will be no lack of the public taking a 
hand in it. That element has been crowded out of Wall 
Street for a long time past, Vrgely due to the fact that its 



PERSONAL POWKR IN SPECULATION. 435 

judgment to predicate operations has been sat on by brute 
force. It has been, therefore, made to feel that the market 
was not one where it was safe to venture. This brute 
force power came from Woerishoffer, who has for a long 
time past been the head and front as a leader on the bear 
side, and was a gigantic wrecker of values. His method 
was to destroy confidence and hammer the vitality out of 
every stock on the list which showed symptoms of life, and 
his power was the more potential, as all the room traders 
were converted to believe in him and were his followers- 
His decease leaves, therefore, the entire bear fraternity with- 
out any head, and consequently in a state of demoralization, 
and in a condition not unlike a ship at sea without a rudder. 
Mr. Woerishoffer was a genial, hospitable man, lovely in char- 
acter at his own home, true to his friends and generous to a 
fault, and will, therefore, be a great loss as a gentleman ; but 
so far as the prosperity of the country goes, his death will 
be the country's gain. To the fact that Mr. "Woerishoffer' s 
power and influence are no longer felt on the market is 
almost entirely due the change of front of the situation, 
which is now one of hopefulness. While he lived the public 
and half the members of the Board were completely terror- 
ized by the fear of him, and were kept in check from being 
buyers, however much the position of affairs warranted going 
on the long side. The bull side of the market has had for a 
long time past to contend with the bold and ferocious atti- 
tude of Mr. Woerishoffer. When the bulls felt justified in 
making a rally and forcing the market to go their way, when 
it looked most encouraging, as a result of their efforts, Mr. 
Woerishoffer would strike their specialty a sledge hammer 
blow on the head ; he would repeat that on every attempt that 
was made, which finally resulted in discouragement. If ten 
thousand shares were not ample for that purpose, he would 
quadruple the quantity ; in fact, he has often been known to 
have outstanding contracts on the short side of the market 
amounting to 200,000 shares of stock at least. As an opera- 



436 CHARLES F. WOERISHOFPER. 

tor he seemed to be so peculiarly constituted as to know no 
fear, and would often turn apparent defeat to success by 
possessing that trait of character. It will be a long time be- 
fore another such determined and desperate man will appear 
on the stage to take his place ; in the meantime, it will be 
plainer sailing in Wall Street, besides safer for operators. 
Mr. Woerishofler, as an operator, was full of expedients. He 
put his whole soul into his operations, and not only would 
he attack the stock market with voraciousness, but he would 
manipulate every quarter where it would aid him ; sometimes 
it would be in the grain market, sometimes by shipping gold, 
and sometimes by the manipulation of the London market. 
He had all the facilities for operation at his fingers' ends, 
in fact he commanded the situation to such an extent* as to 
make his power felt. Mr. Cammack, Mr. Woerishoffer's 
associate, while usually a bear, is a very different man and 
not to be feared, for that gentleman usually sells stocks 
short only on reliable information, and always to a limited 
extent. If he finds that the market does not go down by the 
weight of sales, he soon extricates himself at the first loss. 
In this method of doing business lies his safety. In this 
way he will sell often 10, 20 or 30 thousand shares of stock 
and make the turn, but will not, like his late friend Woeri- 
shoffer, take a position and stand by it through thick and 
thin, and browbeat the market indefinitely until it finally 
goes his way. At the present time, therefore, the bulls have 
no great power to fear whenever they have merit upon which 
to predicate their operations. The future will be brighter 
for Wall Street speculators and investors than it has been for 
a long period, and with the public who may be expected to 
come again to the front, greatly increased activity should 
be the result." 



CHAPTER XLI. 
WOMEN AS SPECULATORS 

Wall Street no Place for Women. — They Lack the 
Mental Equipment. — False Defenses of Feminine 
Financiers. — The Claflin Sisters and Commodore 
Vanderbilt.— Fortune and Reputation Alike Endan- 
gered. 

AS speculators, women hitherto have been utter failures. 
They do not thrive in the atmosphere of Wall Street, 
for they do not seem to have the mental qualities required 
to take in the varied points of the situation upon which 
success in speculation depends. They are, by nature, para- 
sites as speculators, and, when thrown upon their own 
resources, are comparatively helpless. Although they are 
able, through craft and subtlety, to rule the male sex to a 
large extent, yet, when obliged to go alone, they are like a 
ship at sea in a heavy gale without compass, anchor or rud- 
der. They have no ballast apart from men, and are liable 
to perish when adversity arises. When some of our strong- 
minded woman's- right ers read this — and I hope for this 
honor from them — I can imagine certain of them launching 
epithets of scorn against my head, and even charging me 
with dense ignorance regarding the history of the great 
women of the world, and the wonderful achievements of 
some of them. They will, no doubt, cite Joan of Arc against 
me ; Queen Elizabeth, Catharine of Russia, the unfortunate 
and beautiful Mary, Queen of Scots, et ah Women, in gen- 
eral, rarely summon beautiful women in their own cause, but 
in this case they will probably do so ; for it is a trick of the 
sex to bring feminine beauty to play as a trump card when 
man is the game. 

The wife of John Stuart Mill, Mrs. Elizabeth Cady 
Stanton, Julia Ward Howe, and a host of other great 



438 WOMEN AS SPECULATORS. 

female reformers and revolutionists will, without doubt, 
be quoted against my theory. Several of the strong-minded 
novelists and their chief works will be cited to show how 
unfounded is my charge. Ouida, George Elliot, and George 
Sand will probably be arrayed in judgment against me. 
The one answer to all this must be that such women are the 
exceptional cases, which prove the rule and sustain my 
theory. Besides, these fair ones, with the exception of 
Ouida, and, to some extent, Elizabeth Cady Stanton, and 
possibly, George Sand, have never tried their hands at spec- 
ulation. They have excelled in their particular lines, but 
when all their secret history is known, it will be found that 
men were the source of their inspiration. I am aware that 
the opposite theory is held, through false gallantry ; but the 
chivalrous knights who credit the fair sex with more specu- 
lative brains than they possess are in a petty minority, and 
will always remain so as long as men have manhood enough 
to decide according to their judgment instead of their emo- 
tions. 

Fact is the best test on this question, and I will recite a 
few facts in the history of some of the female speculators of 
Wall Street, quite aware that I touch a very delicate subject. 
The namby-pambyism and the pseudo " gallantry " now so 
prevalent, are generally opposed to any fair statement in 
regard to woman's real financial capacity, and, worse than 
all, woman's true interests and functions are greatly aspersed 
and prejudiced by these false sentiments. When carried 
away, as she so often is, by the insidious flatteries of man 
and the showy frivolities of fashion, a woman is rendered 
temporarily blind to these important facts ; but, in the excep- 
tional instances, where she reasons calmly and reflects pru- 
dently, she pays the greatest respect to those of our sex who 
dispense plain advice and blunt opinions. Dudes and 
designing flatterers may revel for a time in their conquests, 
but the opinions of men of judgment, honesty and virtue 
will eventually triumph with those of the other sex who are 
most discerning. 



IvADY COOKS AND HER SISTER. 439 

Let me, then, illustrate my estimate of women as specu- 
lators by a few of the more prominent examples I have 
known in Wall Street, who have essayed to make a fortune 
after the manner of men. I shall take up the present Lady 
Cooke and her sister, Mrs. Woodhull. Lady Cooke has 
now a virtual "castle in Spain," or rather in Portugal, 
besides one of the most elegant mansions in London. 
My knowledge of the history of those sisters and their 
financial relations and business connections with the late 
Commodore Yanderbilt, go to illustrate the fact very clearly 
that the cleverest women cannot be successful in Wall Street ; 
and if this is so, where will the ordinary female be found 
when she essays the role of an operator ? 

The notorious firm of Woodhull, Claflin & Co., in their 
peculiar combination, included Commodore Vanderbilt. I 
shall say something about their methods of operation before 
touching upon the history and biography of the two sisters, 
which is remarkable in the extreme. Yery soon after the 
Commodore had aided to set these two women up as brokers, 
in Broad Street, the firm was known all over the land. 
The present titled Lady Cooke was then plain Tennie C. 
Claflin, and she was plain in every sense of the word, ex- 
cepting in face, which certainly was quite pretty. She had, 
however, less personal magnetism than her celebrated sister, 
Yictoria C. Woodhull, but doubtless made more impression 
on a well-known journalist of this city and upon the Com- 
modore than any one else, until she met Sir — Cooke. 

Tennie was rather phlegmatic in temperament, and could 
therefore exercise but little influence over the ordinary man, 
but she was cool and calculating, and had evidently more 
brain than she seemed to possess. She could wear a win- 
ning smile, but it was manifestly put on for the occasion. 

I recollect her calling at my office one afternoon. After the 
usual interchange of civilities, she told ma she wished to 
deposit a check for $7,000. The check was signed by the 
wealthiest man in Wall Street, and was promptly accepted 



440 WOMEN AS SPECULATORS. 

by my cashier, and duly credited. A few days after this 
event, Miss Tennie drove up to my office in a cab. She 
wore a look of enthusiasm and pleasant surprise. In her 
countenance one could read at a glance that she had a heavy 
thought to divulge. So she said she had a " point." I 
don't care for Cl points " as a rule, but I was bound by all the 
laws of chivalry and business courtesy to give the lady a 
respectful hearing, and I did. The point had emanated 
from a very high source, and for that reason, also, was en- 
titled to respectful consideration. The charming Tennie 
wanted to buy 1,000 shares of New York Central. Though 
always on the alert for business, I was not then at all anxious 
to execute the lady's order. I received Miss Claflin with all 
due respect, and without giving her any intimation that I 
perceived, by my peculiar inspiration, "the gentleman in 
the fence," I tapped my little bell, to which my office mes- 
senger responded. " Tell the cashier," I said, " to make out 
Miss Tennie Claflin's account." This was simply the work 
of a few minutes, and Miss Tennie was instantly furnished 
with a check, including interest for the time of deposit. 
Miss Claflin bowed herself out, and I heaved a sigh of relief, 
and thought that everything was over so far as that check 
was concerned. But I was slightly mistaken. 

Tennie went to the Fourth National Bank immediately, and 
presented the check. She returned" to my office in a few 
minutes afterwards. P. C. Calhoun was then President of the 
Fourth National. When Tennie returned, sho said, "Mr. 
Clews, the bank wishes to have me identified." I called a boy 
and told him to accompany Miss Claflin to the bank, and iden- 
tify her as being entitled to the amount of the check. This 
sealed her credit for that amount at the bank, owing to which 
I obtained the rather doubtful distinction of having been 
made the medium of largely aiding to establish the firm of 
Woodhull & Claflin in Broad street. Myself and the Fourth 
National Bank were said to have been the " sponsors '' for 
this consummation. As soon as I ascertained how my name 



TENNIK'S SCHEME DIDN'T WORK. 441 

was being connected with those ladies, I had a private in- 
terview with the President of the Fourth National, which 
prevented Tennie from using my name to a great extent 
thereafter. I have never attempted to take any credit to my- 
self for this affair, but there is one thing evident, and that is, 
that I did not get euchred in the matter. The Commodore 
was then regarded as the power behind the throne, or behind 
the fair sex. If the sisters had any scheme in the back- 
ground (and I have reason to believe they had,) I did not get 
caught in it. 

Far be it from my purpose to insinuate that these cele- 
brated "sisters" are a sample of all the women who intrude 
into speculative circles. These facts, however, show by 
what sort of methods two of the most notorious female 
speculators of these times gained their success. It would 
be an aspersion on womanhood to suppose that many women 
would be found willing to resort to like methods ; but it is 
safe to say that, as a rule, women can have little other hope 
of success than by using their blandishments to win the 
attentions and the services of the other sex. There are 
doubtless exceptions to this rule, as in the case of Mrs. 
Green, whose unaided sagacity has placed her among the 
most successful of our millionaire speculators. She is, how- 
ever, made up of a powerful masculine brain in an otherwise 
female constitution, and is one among a million of her sex. 

If women are fortunate enough to escape being fleeced 
when they enter Wall Street, it can only be from extraor- 
dinary luck, or from the protecting counsel of their brokers, 
or from compassionate indulgence shown to them when 
swamped by their losses. My own experience shows that 
when they lose their money — as they usually do — they are 
by no means sparing in their pleas for consideration ; and 
this fact shows that women who aspire to this path to for- 
tune are not usually endowed with the self-respect, the 
modesty and the independence of masculine favors which 
characterize all high-minded women. In truth, this is so 



442 WOMEN AS SPECULATORS. 

well understood among the habitues of Wall Street, that 
while a woman who frequents brokers' offices is not likely to 
find any lack of attentions, yet she is sure to lose caste 
among those who bestow such gallantries. In a word, Wall 
Street is not the place for a lady to find either fortune or 
character. 

The explanation given by Mrs. Victoria Woodhull 

is somewhat different from the statement herein made by me 
in reference to the establishment of the brokerage firm, run 
ostensibly by the famous sisters ; and as this celebrated lady 
shows in some of her recent utterances that she has done so 
much for humanity, truth, and financial reform, her state- 
ment is entitled to fair presentation. I shall, therefore, 
give it in full. It is as follows : 

" The first move my sister and I made in this direction 
was to establish a banking and brokerage office in Broad 
street. This step we were induced to take with the view of 
proving that woman, no less than man, can qualify herself 
for the more onerous occupations of life. So startling was 
this innovation that the whole city of New York was aroused 
and when we entered the precincts of Wall and Broad streets 
they were blocked with crowds of people until the novelty 
wore away. But to-day women can establish themselves in 
any business, enter any avenue of life that they are qualified 
through education to fill, either political, financial, scientific, 
medical or mechanical, so great is the advance. At that 
time, as some of the New York papers said, everything, to 
the external view, was at the height of prosperity. But we 
exposed, in our Weekly ', one nefarious scheme after another 
when we realized that companies were floated to work mines 
that did not exist, or that, if they did exist, had nothing in 
them, and to make railways to nowhere in particular, aad 
that banks and insurance societies flourished by devouring 
their shareholders' capital. The papers of 1872 said that in 
one year we had exposed and destroyed nearly every fraudu- 



I.ADY MARTIN RISES To EXPLAIN. 44o 

lent scheme that was then in operation — railroad swindles 
and the banking houses which were palming them off on the 
public. Life insurance companies were reduced from forty 
to nineteen for the whole country ; the Great Southern 
bonds and the Mexican Claim bubbles collapsed. More 
than one tried to buy our silence, and when their money was 
refused they turned and charged us with levying blackmail, 
and, losing in their rage and fear all sense of honor, said 
that we were immoral women or we would not have com- 
menced such an undertaking. Other papers took up the 
warfare. It brought about a great revolution in financial 
matters, but it made us many bitter enemies, for we were 
the first to put ourselves into the breach." 

I shall make no attempt to contradict the bold statement 
of the lady, but simply quote it for what it is worth, leaving 
the inference to the reader, as the novelistic phrase goes, 
but I do hold that the very result of the experiment to 
which she alludes is one of the strongest and most cogent 
arguments in favor of my theory, that women are not quali- 
fied by nature for the speculative and financial operations in 
which so many men have made their mark. Even the few 
apparent exceptions to the rule have been sad failures com- 
pared with the achievements of the male sex in this depart- 
ment of human enterprise. " Jennie June," the able and 
accomplished wife of Mr. Croly, the well-known journalist, 
has essayed the speculative role, but she has not been very 
successful. When women such as these have failed what can 
the ordinary female expect? Well, I think they had better 
abide by the advice of St. Paul in regard to women speaking 
in the church. Let them say or do nothing in the peculiar 
line for the pursuit of which they are evidently disqualified, 
but if they want to know anything, " ask their husbands at 
home." Those who have not yet obtained husbands may 
ask their fathers, brothers or lovers, and if they do so they 
will often be saved a world of trouble. 

There has recently been a curious craze in the ranks of 
young ladies as well as among married women for specula- 



444 WOMEN AS SPECULATORS. 

tion, many of them thinking they could make a fortune 
in a few days, weeks or months, and it is nearly time 
that this speculative mania should be checked or stopped. 
Maidens of uncertain age have probably been foremost 
in leading this movement, and through their influence 
many estimable ladies have been induced to bring finan- 
cial trouble upon their husbands and families. Many 
of the woman's righters think that it would be a glori- 
ous thing to follow in the footsteps of Victoria Woodhull- 

, whom they imagine to have been a success 

in that line of business; whereas she was a sad failure. 
Women as brokers have singularly failed in every known 
instance of experience. Victoria W. has been much more 
successful as an investor than a speculator, and the best 
investment of her life was that of her last marriage. There 
she made a decided hit. Perhaps, her Wall Street experi- 
ence may have assisted her, in a great measure, to accomplish 
this feat. Compared with her two former marriages, how- 
ever, her happy union with the foreign banker is a decided 
success. It is probably only in the matrimonial line that 
women can become successful speculators. 

Now, I shall attempt to give some reasons, with all due re- 
spect to the fair sex — and without trying to lower them in the 
estimation of men — why those dear creatures, so necessary to 
our happiness in many other respects, are not by nature, nor 
even by the best possible education, qualified to become 
speculators. Women are too impulsive and impressionable. 
Although they often arrive at correct conclusions in the or- 
dinary affairs of life with amazing rapidity, they don't reason 
in the way that is indispensable to a successful speculator. 
They jump to a conclusion by a kind of instinct, or it may 
be a sort of inspiration, on a single subject or part of a sub- 
ject, but they are entirely unable to take that broad view of 
the whole question and situation which the speculator has 
to seize at a glance, in the way that Jacob Little, the elder 
Vanderbilt, or Daniel Drew could have done, as I have 



IS MRS. GREEN AN EXCEPTION ? 445 

described in other chapters. Gould possesses many of 
these qualities, though he has never been a speculator like 
the others, in the ordinary and true sense of the term, but, 
as I have clearly shown in another place, made his great 
fortune by putting two or more wrecked railroads together 
and making others believe they were good, and selling out 
on them afterwards, and not by legitimate speculation or 
investment. 

Women who have hitherto engaged in speculation 
have not yet shown that they are capable of generaliz- 
ing the causes which affect the market as these kings of 
finance have done, nor have they illustrated that they are 
possessed of the ability to foresee financial events in the 
same way. Some people may think that Mrs. Hettie Green 
may be an exception to the rule, but, without attempting to 
detract from the abilities of this eminent and wealthy lady, 
I hardly think she has the mental power of any of the great 
operators whom I have named, and though it must be ad- 
mitted that she has done some fine work in manipulating 
Louisville & Nashville, I am of the opinion that she would 
fall very far short of leading a bear attack on the market 
like any of those for which the late Charles F. Woerishoffer 
was famous, and in organizing a " blind pool " she would 
stand no show against Gould, Major Selover, Addison Cam- 
mack or James H. Keene. 

Lady Claflin Cook, formerly Tennie C. Claflin, or " Ten- 
nessee," as she was baptized, though she had not the in- 
tellectual ability of her sister Victoria, appeared to exercise 
more influence over Commodore Yanderbilt on account 
of her greater capacity as a spiritualistic medium. In 
his latter days, as is well known, the Commodore was 
an implicit believer in Spiritualism, and considered it 
expedient to consult mediums in the same way that the 
ancient Greeks and Komans went to their oracles, before 
engaging in any great enterprise. It is not generally 
known that the fallacy of Tennie's mediumistic powers was 



446 WOMEN AS SPECULATORS. 

exposed by the Christian Brothers, and her usefulness to 
the Commodore considerably impaired thereby in his 
estimation. This came about through the influence of Mrs. 
Claflin, the mother of the celebrated sisters. Her supersti- 
tion ran so high that she imagined her daughters were pos- 
sessed of evil spirits through the power of Colonel Blood, 
Victoria's second husband. The holy men received due 
credit for exorcising the spirits, thus freeing the sisters from 
this mysterious thraldom, and Victoria from Blood. Her 
great prosperity and that of her sister began from this date, 
and at the beginning of the celebrated case on the part of 
" young Corneel " to break the Commodore's will the sisters 
suddenly took a trip to England, lest they might be called 
as witnesses. It was a lucky day for them, and their specu- 
lative career is probably now closed. This is the kind of 
speculation for which women are best fitted. The introduc- 
tion to this great "deal" came through Wall Street indirectly, 
but it does not prove by any means that women can be suc- 
cessful operators in speculative transactions and financial 
investments. It simply shows that they are excellent in 
adventures where their emotional feelings are brought to 
bear upon the weaker characteristics of men. 



CHAPTER XLII. 

WESTERN MILLIONAIRES IN NEW YORK. 

Eastward the Star of Wealth and the Tide op Beauty 
Take their Course.— Influence of the Fair Sex on 
This Tendency, and Why.— New York the Great 
Magnet of the Country. — Swinging Into the Tide 
of Fashion.— Collis P. Huntington. — His Career 
from Penury to the Possessor of Thirty Millions. 
— Leland Stanford. — first a Lawyer in Albany, 
and Afterward a Speculator on the Pacific Coast. 
— Has Eolled Up Nearly Forty Millions.— D. O. 
Mills — an Astute and Bold Financier. — Courage 
and Caution Combined — His Bapid Bise in Cali- 
fornia. — He Makes a Fortune by Investing in 
Lake Shore Stock.— Princes of the Pacific Slope 
— Mackay, Flood and Fair. — Their Bise and Prog- 
ress. William Sharon. — A Brief Account of His 
Great Success.— Wm. C. Balston and His Daring 
Speculations.— Begins a Poor New York Boy, and 
Makes a Fortune in California.— John P. Jones. — 
His Eventful Career and Political Progress.— 
"Lucky" Baldwin.— His Business Ability and Ad- 
vancement. — Lucky Speculations. — Amasses Ten or 
Fifteen Millions. — William A. Stewart. — Discov- 
ers the Eureka Placer Diggins. — His Success as a 
Lawyer and in Mining Enterprises.— James Lick.— 
One of the Most Eccentric of the California 
Magnates.— Beal Estate Speculations.— -His Be- 
quest to the Author of the "Star Spangled 
Banner." — John W. Shaw, Speculator and Lawyer. 

NOT a few Western men of wealth have in recent years 
taken up their abode in New York. This is partly, 
and doubtless largely, due to the influence of ladies. The 
ladies of the West of course have heard of Saratoga, the far- 
famed spa of America, and as the fortunes of their husbands 
mount higher and higher into the millions, they become 
more and more anxious to see this great summer resort of 



^48 WESTERN MIUJONAIRES IN NEW YORK. 

wealth and fashion. Their influence prevails, and at the 
height of the gay season they may be seen at the United 
States or the Grand Union. They are in practically a new 
world. There is the rustle and perfume, the glitter and 
show, the pomp and circumstance of the more advanced 
civilization of the East, and the ladies, with innate keenness, 
are quick to perceive a marked difference between this gor- 
geous panorama and the more prosaic surroundings to which 
they have been accustomed. As people of wealth and social 
position, they are naturally presented to some of the society 
leaders of New York, whom they meet at Saratoga, and who 
extend an invitation to visit them in their splendid mansions 
in the metropolis. In New York the Western ladies go to 
the great emporiums of dry goods and fancy articles of all 
sorts, to the famous jewelry stores, and other retail estab- 
lishments patronized by the wealthy. They form a taste 
for all the elegancies of metropolitan life, and this is re- 
vealed in a hundred little ways. 

They have been accustomed, for instance, to wearing two 
buttoned gloves, but now, in emulation of their New York 
sisters, they must have them up nearly to the shoulder. 
Their dresses of Western make do not bear comparison with 
the superb toilettes of New York ladies, and so they seek 
out the most fashionable modistes in the city, and the 
change in their appearance is as marked as it is favorable. 
The innate refinement and love of elegance which is so 
striking a characteristic in most American women is exem- 
plified, perhaps, in no respect more strikingly than in their 
taste in dress, and the Western ladies soon require the finest 
French silks for their dresses. They must have the most ex- 
pensive real lace ; their toilettes must be numerous, rich, and 
varied, and the refinements of other articles of dress or 
ornament to which American women have attained may well 
astonish and even awe the masculine mind. 

In a word, people of wealth are apt to be drawn to New 
York because it is the great magnet of the country, whose 



NEW YORK CITY THE GREAT SOCIAL CENTRE. 449 

attractive power is well nigh irresistible. What London is 
to Great Britain, what Paris is to the Continent, what Rome 
was in its imperial day to the Empire, what proud old Nin- 
eveh was to Assyria, the winged lion of the Orient ; what 
Tyre was to old Syria, whose commercial splendor aroused 
the eloquence of the Hebrew prophet— New York is to the 
immense domain of the American Republic, a natural stage, 
set with innumerable villages, towns, and populous cities, 
with mighty rivers and vast stretches of table-lands and 
prairies, and far-reaching harvest fields and forests, for the 
great drama of civilization on this Continent. New York 
has now a population of approximately 1,500,000. By the 
close of the present century it will certainly reach 2,000,000, 
and the next century will see it increase to perhaps ten times 
that number. The great metropolis attracts by its restless 
activity, it feverish enterprise, and the opportunities which 
it affords to men of ability, but in the connection which I 
am now considering more particularly it attracts as an enor- 
mous lode-stone by its imperial wealth, its Parisian, indeed 
almost Sybaritic luxury, and its social splendor. 

New York city has more wealth than thirteen of the States 
and Territories combined. It is really the great social 
centre of the Republic, and its position as such is becoming 
more and more assured. It will yet outshine London and 
7?aris. Go where we may throughout the country, see what 
cities we may, there is always something lacking which New 
York readily affords. There is emphatically no place like 
New York. Here are some of the finest stores in the world, 
and mansions of which a Doge of Venice or a Lorenzo de 
Medici might have been proud. Here are the most beautiful 
ladies in the world, as well as the most refined and culti- 
vated; here are the finest theatres and art galleries, and 
the true home of opera is in this country ; here is the glitter 
of peerless fashion, the ceaseless roll of splendid equipages, 
and the Bois de Boulonge of America, the Central Park ; 
here there is a constant round of brilliant banquets, after- 



450 WESTERN MILLIONAIRES IN NEW YORK. 

noon teas and receptions, the geVmans of the elite, the grand 
balls, with their more formal pomp and splendid circum- 
stance ; glowing pictures of beautiful women and brave men 
threading the mazes of the dance; scenes of revelry by night 
in an atmosphere loaded with the perfume of rare exotics* 
to the swell of sensuous music. It does not take much of 
this new kind of life to make enthusiastic New Yorkers of 
the wives of Western millionaires, and then nothing remains 
but to purchase a brown stone mansion, and swing into the 
tide of fashion with receptions, balls, and kettle-drums, 
elegant equipages with coachmen in bright-buttoned livery, 
footmen in top boots, maid-servants and man-servants, in- 
cluding a butler and all the other adjuncts of fashionable 
life in the great metropolis. It is of interest to glance at 
the career, by the way, of some of the more famous financial 
powers of the West, who have either settled of recent years 
in New York or who are frequently seen here. 

Collis P. Huntington. 
One of the financiers who may be seen daily entering the 
palatial Mills Building in Broad street, New York, is a tall 
well-built man, with a full beard tinged with gray, a square, 
resolute jaw, and keen bluish- gray eyes. Though now in 
his 66th year, his step is light and quick, betokening good 
habits in his youth and due care of himself in his later years. 
He is one of the best known of American financial chief- 
tains. It is Collis P. Huntington. He is a born leader of 
men. As a boy of 15 he came to New York, with scarcely a 
penny. Now he is worth thirty million dollars. He was 
born October 22d, 1821, at Harwinton, in Litchfield county, 
Connecticut. He numbers among his ancestors Samuel 
Huntington, one of the signers of the Declaration of Inde- 
pendence, who was also President of the Continental Con- 
gress and Governor and Chief Justice of Connecticut ; and 
also Bishop F. D. Huntington and the artist Daniel Hunt- 
ington. C. P. Huntington's father was a farmer and small 



COLUS P. HUNTINGTON. 451 

manufacturer. In his fourteenth year Huntington left school 
and asked his father to give him his time on condition that 
he should support himself. He came to New York in the 
following year, 1836, and bought a small bill of goods, a 
neighbor of his father's becoming his surety. At that early 
fcge he showed the same shrewdness in business, the same 
energy and resolution in carrying through his projects 
as he did in later life. At twenty-three he settled at 
Oneonta, Otsego county, New York, as a general merchant. 
In 1844 he married a Connecticut girl, who proved a valuable 
helpmeet in days when it was never supposed he would ever 
attain any particular financial distinction. In March, 1819, 
he sailed for San Francisco, going by way of the Isthmus, 
and following a consignment of goods which he had made in 
the previous year. He was now in his 28th year, and a 
future full of marvellous success awaited him. This was 
not immediately apparent, however. Business success is not 
usually attained without long and persistent efforts, and in 
spite of repeated discouragements. He found San Francisco 
at that time a resort merely for the idle and the reckless. 
It did not prove at this particular juncture a satisfactory 
field for his business ; his funds ran low, and he determined 
to go to Sacramento. He earned his passage money thither 
on a schooner, by helping to load her for a dollar an hour. 
In Sacramento he started in business, after a time, with a 
small tent as a store, and a limited supply of general mer- 
chandise as his stock in trade ; he worked hard ; he labored 
early and late. Here he met Mark Hopkins, and they 
formed a business copartnership, which proved so success- 
ful that by 1856 the firm was known as one of the wealthiest 
on the Pacific slope. California, however, was isolated. 
It was a long trip over the plains by wagon trains to the 
nearest point of commercial importance east of the Rocky 
Mountains, and the ocean voyage by way of the Isthmus of 
Panama was long and slow. A railroad to the East was im- 
peratively needed, in order to develop the enormous re- 



452 WESTERN MILLIONAIRES IN NEW YORK. 

sources of the broad territory lying west of that natural 
barrier known as the Kocky Mountains. But how to bring 
it about was the question. Few were daring enough to seri- 
ously grapple with the problem. It was in the store of 
Huntington & Hopkins that the project was first considered 
with a resolute purpose to push it through. The Civil War, 
however, broke out just then, and the first gun fired on Fort 
Sumter seemed like the knell of this great project. Collis 
P. Huntington was undaunted. " I will," he says, " be one 
of the eight or ten, if Hopkins agrees, to bear the expense of 
a careful and thorough survey. The result was that seven 
gentlemen agreed to defray the expense of such a survey. 
Two subsequently ceased to give their aid. The remaining 
five organized the Central Pacific Eailroad Company. Mr. 
Huntington at once went to Washington to secure Govern- 
ment aid in constructing the first trans-continental railway. 
He was successful. When the Pacific Eailroad bill was 
passed he telegraphed to his partners with characteristic 
humor and terseness : il We have drawn the elephant." He 
at once came to New York to form a syndicate to take the 
bonds. Many at such a time would have gone to specula- 
tors begging for aid and pledging his bonds for railroad 
material with which to commence the great line. He did 
nothing of the kind. The French saying, " Toujours de 
Vaudace" seemed to be his maxim. He was always bold. 
He coolly announced that he would not dispose of his bonds 
except for cash, and, strange as it may have seemed, he 
capped the climax by refusing to sell any at all unless $1,500,- 
000 worth were taken. He was again successful, but the 
purchaser required more security. Thereupon Mr. Hunt- 
ington made himself and his firm responsible for the whole 
amount. It was thus on the pledge of the private fortunes 
of Mr. Huntington and his partner that the first fifty miles 
of the road were built. After a time, however, funds ran 
low ; it seemed inevitable that the number of laborers should 
be reduced. Certainly more means were necessary. At that 



COIXIS P. HUNTINGTON. 4^3 

time the Government held the first mortgage on the road, 
and no Government subsidy bonds were obtainable until a 
section of fifty miles of the road had been completed. Hunt- 
ington and Hopkins stepped into the breach, and agreed to 
keep five hundred men at work for a year at their private 
expense, and three other gentlemen agreed to furnish three 
hundred men for the same length of time. This resolution 
ended their troubles ; the road was built through to a 
connection with the Atlantic seaboard, and trans continental 
transportation became a fact and no longer a dream. Mr. 
Huntington came to New York again, and here he now re- 
sides in a fine mansion on Park avenue. He is still a hard 
worker, but after business hours he dismisses as far as pos- 
sible the cares of his financial functions. Among the rail- 
road systems controlled and operated by him and his asso- 
ciates, the executive conduct of which is largely directed by 
himself, are the Central Pacific, the Chesapeake & Ohio, the 
Trans-Mississippi roads, and the Southern Pacific, making a 
total of nearly eight thousand miles of line. He is also 
heavily interested in roads in Mexico and Central America 
and steamship lines plying to the Chesapeake Bay, to 
Brazil, China and Japan and other parts of the world. 
Directly or indirectly he has thirty thousand men under him. 
In business he is an autocrat ; his manner is quick and de- 
cisive ; he is direct in his speech, and expresses himself with 
force when he says anything. He also knows when silence 
is golden. He is a good story teller, and has a large fund 
of anecdotes ; he has original wit, a store of quaint, homely 
sayings, which are often singularly apt. Sitting in his office 
chair, with a black skull cap, which he usually wears in busi- 
ness hours, pushed back on his head, he has an open, jolly, 
unassuming look, and the stranger would hardly take him for 
one of the uncrowned financial kings of this country. He 
is one of the few men in this country who have shown them- 
selves more than a match for Jay Gould. 



454 western miujonaires in new york. 

Leland Stanford. 
Leland Stanford, one of California's United States Sena- 
tors, is worth from thirty to forty million dollars. He was 
born in Albany county, New York, March 9, 1824. He 
received an academical education and entered a law office in 
Albany in 1846, and, after three years' study, was admitted 
to practice law in the Supreme Court of the State of New 
York. He removed to Port Washington, in the northern 
part of Wisconsin, and there engaged in the practice of his 
profession for four years. In 1852 fire destroyed his law 
library and other property, whereupon he went to California 
and became associated in business with his three brothers, 
who had preceded him in seeking fortune on the Pacific 
Slope. His first business venture was in Michigan Bluffs, 
but in 1856 he removed to San Francisco to engage in busi- 
ness enterprises on a large scale. His business at one time, 
it seems, was in oil, and, later, in various manufacturing and 
agricultural ventures. He was elected Governor of California 
in 1861. He insisted upon being inaugurated as provided 
by the State constitution, at the Capitol building, though 
the locality was under water by reason of floods. He be- 
came President of the Central Pacific Railroad and superin- 
tended its construction over the mountains, building 530 
miles of it in 293 days. He was elected as a Republican to 
the United States Senate in 1884, and his term does not ex- 
pire till 1891. He is still the President of the Central Pacific 
Railroad and of several of its associated lines, while he is a 
director in others. He owns a princely domain in California, 
known as Palo Alto ranch, comprising six thousand acres, 
which he has devoted to the site of an Industrial University 
for both sexes, as a memorial of his only son, who died some 
years ago. He has richly endowed this great educational 
institution, setting aside for it about ten million dollars. 
Here both sexes will be fitted to fill a useful part in the 
battle of life ; they will be instructed in mechanical arts 
and agricultural as well as in other branches of education, 




• «^z^^-^^^^^-x-^ 



LELAND STANFORD. 455 

which will start the student fairly in life. He found, as 
President of the Central Pacific Kailroad Company, that 
many bright young men of collegiate education were not 
specially fitted for any particular work in the great school 
of life, and those who are familiar with great cities know that 
thousands of men have really wasted their years in obtain- 
ing a collegiate education which never enabled them to earn 
more than barely enough to live upon. They become, in 
many cases, ill-paid book-keepers, entry clerks, salesmen, 
car conductors, postmen, and sometimes find themselves 
obliged to turn their hands to hard manual labor, or else 
starve. Senator Stanford's beneficent plan, then, of giving 
the young such a practical education that they can face the 
world with confidence and with a "reasonable certainty of 
remunerative employment, or with the requisite knowledge 
to guide them in enterprises of their own, is worthy of the 
highest commendation, and his example is likewise worthy 
of the emulation of gentlemen with millions to spare in all 
parts of the country. If Samuel J. Tilden had endowed a 
university of this kind he would have been a far greater 
benefactor in many respects than he has undoubtedly shown 
himself in his will. Governor Stanford's great ranch, which 
is to become a seat of learning, is situated about 32 miles 
from San Francisco, and promises to be the educational 
Mecca of the Pacific Slope. His fortune, notwithstanding 
this princely donation, is still enormous, amounting to 
twenty-five or thirty million dollars. 

Darius O. Mills. 

One of the most notable figures daily seen on Wall Street 
is a man about five feet nine inches in height, with hand- 
some, florid features and a firm jaw, indicative of great 
decision of character. He is now about fifty eight years of 
age, and is as industrious and energetic as when he began 
his eventful career. It is Darius O. Mills. He is one 
of the most astute and one of the boldest financiers in this 



456 WESTERN MILLIONAIRES IN NEVf YORK. 

country. He has the courage of a Richelieu, joined to that 
famous statesman's caution and conservatism when the 
march of events requires it. Of the California magnates he 
is one of the most notable . In New York he has taken the 
highest rank, socially and financially, of them all. As I 
have intimated, he is bold, and yet, on occasion, he wisely 
acts upon the maxim that discretion is the better part of 
valor. He was born in a small town on the Hudson River, 
in this State. Before the California gold excitement broke 
out he and his brother were in the hotel business. He has 
always been dependent on his own exertions ; he has fought 
his way to opulence, such as a prince might envy, by his 
own keen intelligence and undaunted enterprise. He began 
in humble circumstances. To-day he is worth twenty mil- 
lions. He is a permanent resident in the metropolis, and is 
regarded as one of New York's best and most influential 
citizens. 

He laid the foundation of his vast wealth in California. 
On the breaking out of the gold fever he and his brother 
left their native town for the fields of adventure, where men 
of shrewd foresight and determined courage achieved a suc- 
cess stranger than the wonders of a Persian tale. The 
brothers did not trust to luck. They chartered a sailing 
vessel, loaded it with commodities likely to be in demand 
among the miners, and then sailed for the Golden Gate via 
Cape Horn. After a narrow escape from shipwreck they 
arrived at San Francisco and at once opening a store > they 
sold their merchandise to the eager miners at fabulous 
prices. D. O. Mills rapidly accumulated wealth, and when 
¥m. C. Ealston organized the Bank of California, he 
became its President. During the time that Mr. Mills gave 
his attention to the Bank of California it was the most suc- 
cessful institution of a similar character in this country, but 
when he decided to remove to New York his connection 
with the great bank was severed. Disaster came andei 
Ealston's administration. Mr. Mills had continued to be a 



DARIUS O. MIIJ^. 457 

stockholder, and when a financial hurricane struck the bank, 
he was quick to go to the rescue. He contributed largely 
to provide for the bank's losses and to reorganize it with 
new capital, which placed it again among the foremost 
financial institutions of the United States. The credit of 
this Herculean achievement was due more to him perhaps 
than to any other man. His social position is deservedly 
high. His son married the daughter of a member of the 
historic Livingston family, one of the oldest and most illus- 
trious in this country. His daughter married the successoi 
to the editorial chair of Greeley, Whitelaw Eeid, whose able 
management of the Tribune has established a world-wide 
fame for that gentleman. These marriages of his children 
strengthened his already strong position socially, which he 
soon won despite the fact that he was a newcomer. Mr, 
Mills is distinguished for a princely liberality. He believes 
in distributing his property generously while living. He 
has built, therefore, one of the finest residences in this city 
for his son ; he bought for his daughter, Mrs. Eeid, at a 
cost of four hundred thousand dollars, the Yillard palace on 
Madison Avenue. His other acts of generosity are number- 
less. He himself lives in fine style. He paid the highest 
price ever paid per foot for a residence in New York when 
he bought from D. P. Morgan, for one hundred and seventy- 
five thousand dollars, that gentleman's residence directly 
opposite St. Patrick's Cathedral on Fifth Avenue. This 
mansion occupies two lots on a Columbia College leasehold. 
After purchasing it Mr. Mills gave a carte blanche order to 
a noted decorator of New York, and during a trip to Cali- 
fornia the work of decoration was done. On his return he 
at once took possession of a mansion of which a Shah of 
Persia might be proud. He was delighted with all that had 
been wondrously wrought by the beautifying touch of 
splendid art ; with the richly carved wood work, the gor- 
geously picturesque ceilings, the inlaid walls and floors, and 
the tout ensemble of Oriental magnificence. His content 



458 WESTERN MILLIONAIRES IN NEW YORK. 

ment was complete, but a surprise awaited him. It was the 
decorator's bill for four hundred and fifty thousand dollars. 
This, it is said, slightly disturbed his serenity. It caused 
him to look with a critic's eye on the splendid decorations 
which constituted a study in the fine arts at such high rates of 
tuition. As with the eagle eye of a connoisseur, he perceived 
that the bill was altogether too high. He succeeded in get- 
ting, however, only a slight reduction. Moral : Don't give 
carte blanche orders to decorators any more than you would 
hire a cab without first making a bargain. 

Mr. Mills came to New York to take up his residence 
some years ago, with a fortune of many millions of dollars. 
He is particularly worthy of a place in this book ; as from 
the time of making his home here he has been prom- 
inently identified with Wall Street Soon after taking up 
his residence here he became acquainted with "William H. 
Yanderbilt, at whose suggestion he invested very heavily 
in Lake Shore. He made by this operation no less than 
$2,700,000. This large sum he devoted to the construc- 
tion of a palatial building on Broad Street, which bears 
his name, and is probably the finest and most complete 
structure for oflice purposes in the world. It has a frontage 
of 175 feet on Broad street, 30 feet on Wall street, and 150 
feet on Exchange place, and is nine stories high. Thirteen 
buildings were torn down to secure its site. It was begun 
in May, 1880, and was practically finished in one year, the 
men working night and day. It is built largely of Phila- 
delphia brick, with Belleville brown stone trimmings. It 
is otherwise ornamented with terra cotta, and Corinthian 
and Kenaissance capitols, and red Kentucky marble pillars. 
On the first three floors the wainscoting is of Italian marble, 
and there is marble tiling throughout the building ; the 
woodwork on the first two floors is mahogany, and on the 
upper floors it is reeded and panelled cherry. There are 
400 offices, and the tenant population is 1,200. For weeks 
at a time the total daily average number of persons carried 



PRINCES OF THE PACIFIC SLOPE. 459 

on six elevators has been no less than fifteen thousand. The 
working force necessary to look after this magnificent struc- 
ture numbers 60 person. The net annual rental is about 
$200,000, the highest individual rent paid being $20,000. 

Mr. Mills' exceptional skill as a financier has won him a 
high reputation in New York, and his counsel on vexed and 
abstruse questions has often been quoted by powerful cor- 
porations. He is a director in several railroads, including 
the Erie, and it is understood is interested in mining enter- 
prises. In the battle of life he has achieved signal success. 
His career is a fitting lesson to future generations. 

Charles Crocker. 

Charles Crocker is now about 65 years of age, and lives 
in New York city. He was born in Ohio in humble circum- 
stances, and early in life followed for a time the occupa- 
tion of blacksmith. He used to get up at four o'clock in 
the morning and work hard all day. It was a hard life, and 
he engaged, after a time, in other occupations, gradually, in 
the meantime, by thrift and industry, amassing a sufficient 
sum to enable him to go to California, in the height of the 
mining fever, and establish a general store in Sacramento. 
He met with considerable success in trade, and when the 
project was formed to build the Central Pacific Kailroad, he 
lent his aid to the enterprise, and has ever since been 
identified with that corporation. He is now its Secretary 
and Vice-President, and is also interested in associate roads. 

Mark Hopkins. 

Mark Hopkins died some years ago, worth fifteen million 
dollars. He was from Massachusetts, and went to California 
on the breaking out of the mining furore, and settled in 
Sacramento, where he soon engaged in the hardware busi- 
ness with C. P. Huntington, with whom he also embarked 
in the ambitious enterprise of building the Central Pacific 
Railroad. He won a large fortune in his railroad operations. 



4(50 WESTERN MIUJONAIRES IN NEW YORK. 

His widow has a magnificent estate at South Great Barring- 
ton, in Massachusetts. 

We come now to the famous mining princes of the Pacific 
Slope. The discovery of gold in California, and of the rich 
deposits of the precious metal elsewhere on the Pacific Slope, 
led not merely to the accumulation of vast individual for 
tunes ; it sent the currents of new life humming through 
the veins, so to speak, of the entire country ; it stimulated 
trade ; it awakened new life ; it gave a tremendous impulse to 
a thousand industrial enterprises ; it sent the Republic forth 
as a conquering hero of commerce, leveling all obstacles and 
laughing at difficulties ; tunneling mountains, building rail- 
roads whose very rails seem to catch a golden gleam from 
the rich traffic ; spanning great rivers with majestic bridges t 
building ships and steamers ; setting vast manufactories to 
awake the solitude of primeval forests with the thunder of 
machinery, the ringing of hammers and the thousand voices 
of labor ; building villages, towns and cities with such mar> 
velous rapidity as to suggest the touch of the magical wand 
of genii. With the treasure taken from her bosom nature 
herself was subdued; an electric thrill stirred the oldei 
centres of population as it led the new sections, and the 
Republic has ever since, regardless of those periodical 
reactions known as panics, kept its onward march in fulfill- 
ment of that far-sighted prophecy that the star of empire 
takes its way to the West, and that on the broad stage of the 
American Continent the Anglo-Saxon race will win far greater 
triumphs than it has ever achieved in its amazing career 
since it sprang from the barbarism of the Northern wilds of 
Europe to take its proud station as the dominant family on 
this globe. The rich gold mines, and later the great silver 
mines, have given this country a feverish dream of specula- 
tion, in which gigantic fortunes have been amassed. The 
richest deposit of silver in Nevada, if not in the world, wa3 
the Comstock lode on the east side of Mount Davidson, in 
Storey county, and partly under the towns of Virginia and 




'//£#-^^a^c^7 



JOHN W. MACK AY. 461 

Gold Hill. At one time its ores contained one-third in value 
of gold and two-thirds of silver. The lode has been traced 
on the surface some twenty-seven thousand feet, and has 
actually been explored about twenty thousand feet, within 
which space most of the larger mines are located. The lode 
has been opened to the depth of about twenty-two hundred 
feet. The various mines on this lode have given a total 
return, it is estimated, of some three hundred millions of 
dollars. 

One of the most famous of the bonanza magnates is John 
W. Mackay. His rise to financial power reads like a 
romance, and yet his astounding success was by no means 
attained as by turning over a hand. He believed in the 
richness of the bonanza field ; he and a number of associ- 
ates purchased the controlling interest in the corporations 
which owned it. Then began the grand hunt for the ore 
body. Others had tried to find it, but had given it up in 
despair. The idea that the property was worth working 
was laughed to scorn. The men who believed in it per- 
sisted in spite of all discouragements, which were many ; 
they spent about half a million in prospecting. They made 
in 1875, after long and trying efforts, the famous strike 
which astounded the business world, and stirred up a specu- 
lative fever which did not die out for years. This plain, 
quiet,iinpretending financier was born in the humblest circum- 
stances in Dublin, Nov. 28, 1835, and is consequently in his 
52nd year. He came to this country very early in life, and 
as a boy worked for Wm. H. Webb, the once famous ship 
builder of New York. In 1852 he went with a party to Cali- 
fornia, sailing in one of the ships of his former employer. 
It has been said that previous to this he kept a liquor saloon 
in Louisville. Like so many others, however, he caught the 
gold fever, and on arriving in California he immediately en- 
gaged in placer mining in Sierra county of that State. He 
met with the usual vicissitudes of fortune, but at last a fair 
degree of success rewarded his untiring efforts, and he there- 



462 WESTERN MILLIONAIRES IN NEW YORK. 

upon went to Virginia City, Nevada, and started a tunnel in 
what was called the Union ground, north of the Ophir mine. 
The speculation was disastrous. He lost all he possessed, 
but he was not conquered. He secured work as a timber 
man in the Mexican mine, and he engaged also as a miner, 
swinging the pick and shovel, and little dreaming that this 
would be told as an interesting circumstance in a career 
which was to be successful beyond his wildest hopes. He 
labored industriously ; he saved his money, and he watched 
his opportunities, which very few people do. He got his 
first important start in connection with the Kentuck mine in 
Gold Hill, but he had frequent fluctuations of fortune until 
finally, in 1863, he formed a mining co-partnership with J. 
M. Walker, a brother of a former Governor of Virginia, and 
subsequently the firm was strengthened by the addition of 
Messrs. Flood, O'Brien, and Fair. The firm struck their 
first great success in 1865-67 during their control of the 
Hale & Norcross mine. Later came the celebrated California 
and Consolidated Virginia mines, the wonders of the mining 
world. He was married in 1867 to the daughter of Daniel 
Hungerford. Hungerford, by the way, was a Canadian, 
who came to New York many years ago and lived in West 
Broadway, where he followed the occupation of a barber. 
When the Mexican war broke out he enlisted, and at the 
close of that war he returned to his family and his previous 
occupation. When the famous Colonel Walker raised a 
force in New York for the invasion of Nicaraugua, Hunger- 
ford, who seems to have been of an adventurous spirit, 
enlisted, and barely escaped the fate of Walker and those 
of his force who were captured and shot by the Nicaraugua 
authorities. He escaped by fleet running, and again re- 
turned to his family and tonsorial profession, dying soon 
after his return. His daughter married a physician, with 
whom she went to Nevada. He died and left her in reduced 
circumstances. With the open-handed generosity character- 
istic of the financiers of the Pacific Slope, a number of 




JAMES C. FLOOD. 



JAMES C. FLOOD. 463 

wealthy gentlemen, learning of the circumstances, started a 
subscription, to which Mr. Mackay made a large contribu- 
tion. She called to thank him, and the acquaintance thus 
begun ripened into mutual attachment, whose happy consum- 
mation was their marriage a few years later. Mrs. Mackay, 
during the last few years, has resided for the most part in 
Paris and London, where she has lived on a scale of mag- 
nificence which has dazzled and astounded foreigners. Mr. 
Mackay himself has apparently little inclination for social 
triumphs ; he is well liked wherever he is known for his 
quick, genial manners, but seems to avoid publicity. He 
alternates, for the most part, between New York and San 
Francisco. In New York his office is at the Nevada Bank, 
in which he is a large stockholder, owning, in fact, half of 
the stock. In recent years he has become largely interested 
in a cable line to Europe, started in opposition to other 
well-known lines. His fortune is estimated at twenty mil- 
lions. Mr. Mackay' s step-daughter was married a few years 
ago to the Prince of Colonna, who belongs to one of the 
most ancient and wealthy families of the nobility of Italy. 

James C. Flood was once a poor boy of New York city, 
now he is worth more millions than can exactly be told. He 
went to San Francisco in 1849, poor and friendless, and in 
uompany with the late W. S. O'Brien, opened a liquor saloon, 
where he sold whiskey at 12i cents a glass. He drew the 
liquor from casks piled one upon another. In those early 
days of the future queen of the Pacific Slope there were no 
gorgeous saloons with tesselated marble floors, a dazzling 
stretch of costly mirrors, and a gallery of rare pictures. 
Such resorts as Flood's, in the slang of the day, were termed 
" gin mills," and in the man who drew whiskey from the casks 
rather than tendering a heavy cut glass decanter, it would 
have been difficult for the most fanciful to have recognized 
the future famous man of millions. He made money and 
went into mining stocks. The first great mining speculation 
in which Flood, with his partner, O'Brien, embarked was in 



464 WESTERN MILLIONAIRES IN NEW YORK. 

1862, in Kentuck and the stocks of other mines on the 
Comstock lode. Then they went heavily into Hale & Nor- 
cross, one of the old time favorites. They were generally 
successful in these operations, but a crowning and dazzling 
triumph awaited them. In February of 1874 there were 
whispers that the Consolidated Virginia, which had caused 
a furore some ten years previous, but had fallen off materi- 
ally, and the newer mine, the California, would soon develop 
rich bodies of ore. Flood and his partners, who owned 
these mines, became certain of this prospective bonanza in 
the following winter, and early in 1875 came the announce- 
ment of the discovery of the fabulous ore bodies which made 
the name of the Comstock lode known round the world, and 
lifted the owners of the celebrated mines at once into wealth 
so enormous as to make the extravagances of the Arabian 
Nights seem tame. The establishment of the Nevada Bank 
was the idea of Mr. Flood, who is said to possess a natural 
aptitude for finance. He became president of the bank and 
a large stockholder in it. He is a man of compact, robust 
build, fi.Ye feet nine inches in height, with quiet, courteous 
manners, and of an energetic, self-reliant and industrious 
disposition. He has had a remarkable rise, but has shown 
himself equal to the surprising good fortune which has 
attended his strange career. 

It is of interest to recall the fact that the original Com- 
stock syndicate, most of whom derived such enormous wealth 
from the Comstock lode, was composed of Messrs. Mackay, 
Flood, O'Brien, Fair and Walker. Soon after these gentle- 
men became associated in their great enterprises, Walker 
sold out his share of one-fifth to Mackay, for a very small 
consideration, and this consequently gave that gentleman an 
interest of two-fifths, against the one-fifth share held by each 
of the three others in the firm, a fact which accounts for 
Mackay' s greater wealth. Walker, one of the original parties 
in interest, afterward not only lost in mining and other specu- 
lations the amount which Mackay had paid him for his share, 




JAMES G. FAIR. 



DIED WITHOUT A CENT. 465 

but all his other means, and was, in fact, completely beggared, 
and died in an asylum for paupers. He had experienced 
dramatic vicissitudes of fortune. He ought to have been 
worth fully twenty millions of dollars. He died without a 
penny. 

W. S. O'Brien. 
W.S. O'Brien was associated with Mackay, Flood and 
Fair in developing mines on the Comstock, and died in 1878 
enormously wealthy. He was born in New York, went to 
San Francisco in the early days of the gold excitement, and 
at first kept a liquor saloon with Flood. He gradually 
engaged in mining speculations, and ultimately met with 
such success that he died famous as one of the bonanza 
kings. It is an interesting circumstance that four Irishmen 
secured the lion's share of the bonanza millions, and they 
were all born poor. The harp of Tara's halls never was 
struck to so strange a roundelay as this. 

James G. Fair. 

James G. Fair is another of the bonanza kings who has had 
an interesting career. He was born Dec. 3d, 1831, near Bel- 
fast, Ireland. He came to this country with his parents in 
1843 and settled in Illinois. He received a thorough business 
education in Chicago, and at the same time devoted consid- 
erable attention to scientific studies. On the breaking out 
of the gold fever in 1849 he removed to California, settling 
at Long's Bar, Feather Biver, in that State. He mined on 
the Bar for some time without much success, and then turned 
his attention to quartz mining. Placer mining in those days 
was conducted in too primitive a fashion to suit a man of 
his mechanical ingenuity. Placer, by the way, is a term of 
Spanish origin, signifying a gravelly place where gold is 
found, especially by the side of a river or in the bed of a 
mountain torrent. In quartz mining, on the other hand 
the metal is obtained by smelting after crushing the rock of 



466 WESTERN MILLIONAIRES IN NEW YORK. 

which it forms a part. Mr. Fair engaged in quartz min- 
ing in Calaveras county, California, and later became super- 
intendent of various quartz mines in other parts of the State. 
In 1855 he became superintendent of the Ophir, and four 
years later of the Hale & Norcross. In 1860 he removed 
to Nevada and became actively engaged in developing mines. 
In 1867 he formed a partnership with John W. Mackay, 
James C. Flood and Wm. S. O'Brien. The firm, at Mr. 
Fair's suggestion, obtained control of the California and 
Sides mine, the White & Murphy, the Central Nos. 1 and 2, 
and the tract known as the Kinney ground, and it was in this 
rich field that the famous California and Consolidated Yir 
ginia mines were developed, the yield of which, under Mr. 
Fairs superintendence, is estimated at about two hundred 
million dollars. He began speculative buying of real estate 
in San Francisco in 1858, and is now said to own seventy 
acres of land in different parts of that city, constituting in 
itself an enormous fortune. He was elected to the United 
States Senate as a Democrat to succeed the Hon. William 
Sharon, and took his seat in 1881, his term expiring March 
3d, 1887. In person Mr. Fair is of about the medium height, 
of compact, solid build, has handsome features, and is a man 
who would be likely to attract attention anywhere. His 
fortune is estimated at from ten to twenty millions. 

William Sharon. 

William Sharon was one of the remarkable men devel- 
oped by the mining excitement in this country, one of the 
sagacious, self-reliant men who inevitably come to the front 
wherever they are found. He showed his mettle when the 
Bank of California was forced to suspend, and when a com- 
mercial pall hung over San Francisco. In the midst of the 
frenzied excitement he was one of the few who kept cool 
and never lost their courage. The wild excitement on 
the Stock Exchange of San Francisco was stopped at his 
suggestion that the sessions be indefinitely postponed 



WIIXIAM SHARON. 467 

Then he called a meeting of the Bank of California directors 
and made a stirring appeal to them to stand bj the bank in 
the hour of its misfortune, and rescue the business interests 
of the coast from the paralysis by which they were likely to 
be seized if they did not take a resolute stand, put their shoul- 
ders to the wheel and acquit themselves like men. He pro- 
posed that each subscribe liberally to put the bank again in 
operation, and set the example by a very large subscription 
— said to have been five million dollars. Others also sub- 
scribed liberally, and to the astonishment and joy of the 
city the bank again threw open its doors for business. He 
had some years prior to this become connected in business 
with the lamented Ealston. 

William Sharon was born in Ohio, and early in life began 
the practice of law in Illinois. He went to San Francisco, 
and immediately engaged in the real estate business, and 
ultimately became a very large operator in lands, but failed, 
and in 1863 went to Nevada to take the agency of the Bank 
of California in Gold Hill and Virginia City. The bank 
had large loans out on mining property, and as the produc- 
tion of many of the mines had seriously declined, Ealston 
grew uneasy, and was greatly relieved when Sharon offered 
to become personally responsible for these loans on 
condition that the bank advance him a considerable sum to 
be used in contemplated mining developments, and allow 
him two years in which to meet the loans. The terms were 
accepted. Sharon ran new drifts here and there, and in 
four months, to Kalston's amazement, paid all the loans, and 
placed on deposit three-quarters of a million to his own 
account. This feat drew general attention to him ; he was 
consulted in large operations ; he became a director in the 
great bank. He never forgot Kalston's kindness to him. 
He assumed entire charge of the personal affairs of Ralston 
after his death, and settled on Mrs. Ealston nearly half a 
million of dollars. He finally entered politics, and represented 
California in the United States Senate. He was a conspicu* 



468 WESTERN MIUJONAIRKS IN NEW YORK. 

ous example of business acumen and surprising energy, as 
well as of becoming gratitude to the knightly Ralston, of 
whom he always said : " He was my benefactor.' 

Wm. C. Ealston. 

Wm. 0. Ralston was one of the most notable, as he was 
one of the most remarkable, of all the financial giants of 
the Pacific Slope. He ascended the gilded summits of finan- 
cial renown, and he fell into a shadowy valley of stern retri- 
bution and utter ruin. No man could be more popular, none 
could exhibit greater daring in his business enterprises. He 
was a New York boy, but drifted to the West, and became a 
clerk on a Mississippi steamboat, finally became Captain, 
and having amassed some money, he leaped into specula- 
tive waters, like another Leander, to swim the Hellespont 
of California finance. He became associated with Com- 
modore Garrison and two others in the banking business in 
San Francisco about 1853. Finally he organized the Bank 
of California, and became first its Cashier and then its Presi- 
dent. His rise was marvellous. At one time he was sup- 
posed to be worth $20,000,000 or more. He had a country 
seat at Belmont, in San Mateo county, that a king might have 
been proud to own, and here he entertained in royal fashion. 
Every celebrity that visited California was received with 
regal hospitality by this monetary prince of the golden 
State* But as the allied armies arrayed against Napoleon 
were often put to rout from being too much spread out, so 
this financial Titan, combining the genius and courage of 
many in one, was finally overthrown by adverse fortune, 
because his enterprises were too much spread out. He had 
too many projects on hand at one time. He lost heavily in 
mining and real estate speculations ; he lost in manufactur- 
ing enterprises. Fate struck him suddenly as with the ham- 
mer of Thor. In one fearful storm of trouble all his mis- 
fortune descended upon him at once. All the waves and 



DRIVEN TO SCJICIDK. 469 

billows of adversity broke over him. He had no chance to 
recover himself. Birnam seemed all at once to come to his 
financial Dunsinane. An investigation of the affairs of the 
Bank of California was made by the directors of that insti- 
tution. Their suspicions had been aroused that Balston's 
administration of its affairs was open to grave criticism. He 
attended the meeting of the directors, and was coldly re- 
quested to withdraw during the discussion. He who had 
been absolute in the great bank saw that his power was 
gone ; he stood on the brink of a moral Niagara. He left 
the Directors to make the inevitable discovery that he had 
over-issued the stock of the bank some $6,000,000, and 
crazed with grief and despair, found a suicide's death in the 
waters of the bay. He had over-issued the stock hoping 
and believing that success in some one of his numerous and 
gigantic enterprises would enable him to provide for it, but 
disaster stealing on him suddenly, like a thief in the night, 
frustrated any plan of restitution, and he paid for his fault 
with his life. He was a man about ^.Ye feet seven inches in 
height, with a rather florid complexion, a full light brown 
beard and kindly brown eyes. He was once the idol of 
California, and his one great fault is almost swallowed up 
in the memory of his princely generosity, his hearty geni- 
ality, and his many other engaging traits. 

John P. Jones. 

John P. Jones has had an eventful career. He has made 
and lost millions. He was worth at one time five or six mil- 
lions. He lost very heavily in railroad enterprises in 
Southern California. He had been engaged in mining and 
had won a big heap of treasure, probably as much wealth 
as any one needs, or more, but with the restless ambition of 
one who would travel still higher up the glittering heights 
of financial fame he sought to emulate Huntington, Stanford 
and others and become a railroad magnate. It was a case 
of vaulting ambition o'erleaping itself and falling on the 



470 WESTERN MILLIONAIRES IN NEW YORK. 

other side. He lost almost his entire fortune, but he has 
now regained his feet again and is once more wealthy. He 
profited by the revival of interest in mines and mining 
stocks in 1886, and secured, moreover, a considerable inter- 
est in the Alaska mine, in which D. O. Mills was interested. 
He bought stocks of once famous mines at low prices, 
and when the advance on the revival of public in- 
terest in mining shares took place he was a large 
gainer. John W. Mackay has within the last few 
years shown a disposition to lend him assistance in 
his endeavors to recover his former footing. John P. 
Jones is one of a number of Englishmen who have won 
financial celebrity in this country. He was born in Here- 
fordshire, England, in 1830, and came to this country with 
his parents when only a year old, settling in Ohio. For a 
few years he attended school in Cleveland. In the early 
days of the gold excitement in California he emigrated to 
that State and engaged in farming and mining. He acquired 
a taste for politics. He represented his county in both 
bouses of the State Assembly. In 1867 he went to Gold 
Hill, Nevada, and has ever since been engaged to a greater 
or less extent in developing the mineral resources of that 
State. In his earlier days he worked hard as a miner in one 
of the counties of California. He worked in placers and 
tunnels ; he had many ups and down. He was daring and 
ambitious, and sometimes seemingly reckless. He spent a 
million dollars trying to develop some mines in Mono, Cali- 
fornia, and then gave up the attempt. At one time he con- 
trolled the Ophir, Savage and Crown Point mines on the 
Comstock lode ; he owned large establishments for the man- 
ufacture of ice in Georgia, Louisiana and Texas and else^ 
where ; he made large purchases of land in California ; he 
engaged in a multitude of ambitious enterprises. He had 
too many irons in the fire. Misfortune did not daunt him. 
Like the old hunter of tradition, his motto was, " Pick the 
flint and try it again." He may yet become a financial 



R. J. BALDWIN. 471 

power again. He has a certain readiness as a speaker ; he 
is of large frame and not unpleasing aspect, and his taste 
for public debate and the excitements of the political arena 
have led him into contests for public honors which have 
been successful. He was elected as a Republican to the 
United States Senate in 1872, and has twice been elected, so 
that his term will not expire until 1891. 

R. J. Baldwin has become widely known by the sobriquet 
of " lucky." He is 59 years old and was born in Ohio. His 
father moved to Indiana and had a farm adjoining that of 
Schuyler Colfax. There he worked till he reached his 
twentieth year. He married in the following year and went 
to a small place in Indiana and kept a country store ; he 
soon built canal boats to ply between Chicago and St. Louis. 
He went to Racine, Wisconsin, in 1850, and engaged in the 
grocery business with considerable success. He was keen 
at a bargain and always had an eye out for the main chance. 
His so-called " luck " was in reality business skill. He went 
to California in 1853, after purchasing a number of horses 
and wagons and an ample supply of merchandise. He 
found a good market for his goods in Salt Lake, making 
nearly four thousand dollars on the venture, and further on 
he sold his wagons and harness and made up a pack train 
over the mountains, and, arriving in San Francisco, sold his 
teams at good prices. His trip had been a complete success. 
He now went into the hotel business, and, after selling out 
twice to good advantage, he formed a partnership to engage 
in the brick trade, which, proving very successful mainly 
through his skill in drumming up business, he decided to go 
into it alone. He himself knew nothing about brick making, 
but he studied up the subject and eventually became an 
expert. He obtained remunerative contracts with the 
Government ; he boarded his men and made for a time 
about fifteen hundred dollars a month. He finally sold out 
and went into the livery business. He made money and 
invested considerable in real estate. He sold out and went 



472 WESTERN MILLIONAIRES IN NEW YORK. 

to Virginia City, Nevada, at the breaking out of the mining 
excitement there. At that point he started a lumber yard. 
He speculated in mines and met at times with great success, 
but once he was so badly worsted in this great game that he 
was compelled to mortgage all of his property ; but the tide 
turned soon and became a flood of gold. He speculated in 
such mines as the Crown Point, Belcher, Consolidated Vir- 
ginia, California and Ophir. He acquired at one time the 
controlling interest in the Ophir. He has speculated heavily 
in San Francisco real estate, and with marked success. He 
erected a building there that cost, with all its appurtenances, 
over three million dollars. Part of it is used as a theatre. 
He bought sixty thousand acres of land in Los Angelos 
county, and had practically a town of his own. He spent 
about half a million dollars improving this tract, more par- 
ticularly his Santa Anita ranch of over fifteen thousand 
acres. His sagacity and industry, rather than mere " luck," 
have won him his fortune of ten or fifteen million dollars. 

William H. Stewart. 
William H. Stewart, another successful man of the Far 
West, who has twice represented Nevada in the United 
States Senate, was a New York boy, born in Wayne county 
in 1827. A good many New York boys have succeeded in 
the West. He went to California early in 1850. In the 
fall of that year, while prospecting, he discovered the Eureka 
placer diggings ; he built saw mills, worked claims because 
disgusted with mining, went to Nevada City in the spring of 
1852, and in December of that year was appointed District 
Attorney, was elected to that ofiice in the following year, 
and in 1854 was appointed Attorney General, thereupon 
taking up his residence in San Francisco, where, by the way, 
he married a daughter of ex-Governor Eoote, of Mississippi. 
Later he returned to Nevada City and established a very 
lucrative law practice, and remained in that county till the 
spring of 1860, when the furore over the Comstock mines 



AN ECCENTRIC BENEFACTOR. 

induced him to go to Virginia City, Nevada. He thorough 
understood mining law, and soon had a large practice. The 
large sums which his legal talents brought him were invested 
in mines, and he became one of the leading operators on the 
Comstock lode. He invested half a million dollars in San 
Francisco real estate. He rendered important services to 
mining interests while in the United States Senate, in pre- 
venting the passage of a bill providing for the sale of all 
the mineral lands of the country at public auction, a 
measure which it was supposed would concentrate much of 
the mining property of the United States into the hands of 
the wealthy. 

James Lick. 

James Lick, born in Pennsylvania in 1796, was one of 
the strange characters of California. He went there in 1847, 
after having been a manufacturer of pianos in this country 
and different parts of South America. He took $30,000 
to San Francisco, which he invested in real estate, foresee- 
ing that it was to become the great city of the Pacific Slope. 
He bought lots by the mile. His profits were enormous. 
Se became one of the great millionaires of California. He 
set aside $2,000,000 in 1874, to be held by seven trustees, 
and to be devoted to certain public and charitable purposes. 
In 1875 he desired to make some changes in his schedule of 
gifts, and when the trustees expressed some doubts as to 
their legal right to give assent, at his request they resigned. 
The next year he died, and then followed a litigation by 
his son and other heirs, which was finally so adjusted as to 
leave a large sum to be devoted to various public and char- 
itable projects. He left $60,000 to be devoted to a statue 
of Francis Scott Key, the author of the " Star Spangled 
Banner." He was very eccentric, due, it is said, to an early 
disappointment in love. He sought the hand of a miller's 
daughter, but was dismissed by the father, because young 
Lick did not own a mill. When he became enormouslv 



WESTERN MIUJONAIRES IN NEW YORK. 

ealthy, James Lick built a large mill, and adorned it with 
mahogany and costly woods as a memorial of his youthful 
attachment. He seemed to derive almost childish pleasure 
in contemplating this splendid building, which would have 
so far outshone any that could ever have been owned by the 
man who had once spurned him for his poverty. The poor 
young men of one generation are often the millionaires of 
the next. One of the great monuments to his memory is the 
great Lick Observatory. 

John W. Shaw. 

John W. Shaw, who made considerable money in mines 
and mining stocks, is one of the Western millionaires who 
reside in New York. He was a superintendent of mines, 
and speculated on his information. He was at one time 
prominently identified with the Eureka Consolidated mine. 
He is supposed to be worth $4,000,000 to $5,000,000, and is 
now President of the Hocking Valley Eoad. Messrs. Keene, 
Lent, Dewey, Harpending, Verdenal and other more or less 
successful men well known in California, live here. One 
of the distinguished lawyers of the "West who have come 
here to establish a practice is ex-Governor Hoadly, of Ohio. 
Austin Corbin, though at one time a lawyer in Iowa, found 
his true field in New York, and Alfred Sully, after amassing 
some means in the same State, likewise found himself drawn 
to New York, and won unexpected success in finance here. 



CHAPTEE XLIII. 

RAILROAD INVESTMENTS. 

Vastness of our Railroad System. — Its Cost.— Fall in 
the Rate of Interest. — Tendency to a Four Per 
Cent. Rate on Railroad Bonds. — Effect of the 
Change on Stocks. — Prospective Speculation.— Some 
Social Inequities to be Adjusted through Cheaper 
Transportation. 

THERE are, perhaps, few who distinctly realize the 
magnitude of the amount of capital invested in the 
railroads of the United States. The immense area over 
which our population is distributed necessitates a much 
greater length of railroad, as compared with inhabitants, 
than exists in any other nation. In 1884 we had, according 
to "Poor's Manual of Railroads," no less than 125,380 
miles of road within the United States, which exceeds the 
entire mileage of Europe. This was required to provide for 
the travel and transportation of about 54,000,000 of popula- 
tion, while Great Britain, France, and Germany, with their 
combined population of 120,000,000, had in the same year 
about 60,000 miles, and Russia, with some 85,000,000 of 
people, had only about 19,000 miles. 

It can hardly be a matter for boasting that we have found 
it necessary to provide such a disproportionate length of 
road to accommodate the wants of trade and travel ; for the 
more capital we have to invest in the facilities for carriage 
the less we have for investment in the means for production, 
and the more we have to pay for transportation service the 
worse is our position for competing with other nations. This, 
undoubtedly, is a much more important factor than is gen- 
erally allowed in the question of our ability to command a 
share in the world's international commerce proportioned 
to the extent of our population. 



476 RAILROAD INVESTMENTS. 

The cost of our railroads, as indicated by the capitaliza- 
tion statements of the Companies in 1884, is represented by 
$3,669,116,000 in bonds and $3,762,016,000 of stock. As 
shown in another chapter on " Railroad Methods," the 
actual cash outlay in construction and equipments is very 
much less than these figures ; but the roads aim to earn an 
investment return on these enormously inflated amounts, 
and do so as far as they may be able. 

Elsewhere in this volume I have shown how the effort to 
earn dividends upon hundreds of millions of fictitious rail- 
road capital is imposing an unjust tax on the people, retard- 
ing the growth of national commerce and creating a distinct 
millionaire class not without danger to our political future ; 
and I wish here to refer to one fact from which we may 
hope for some mitigation of this pernicious tendency. 

Within recent years it has become very clear that a large 
permanent reduction has been effected in the rate of interest 
on fixed capital. Perhaps, the principal causes of this 
change has been (1) the high credit of the Government, 
represented by a 3 per cent, rate of interest on its loans ; 
(2) diminution of the element of risk in our corporate enter- 
prises ; (3) the more developed and consolidated condition 
of our industry; and (4) the growth of the national earnings 
in a ratio disproportionate to the new undertakings inviting 
capital. To such an extent has the loanable resources of 
the country increased that, whereas ten to fifteen years 
ago we found it necessary to borrow in other countries a 
large portion of the money needed to build our railroads, 
we are now almost entirely independent of European lend- 
ers, and are beginning to invest in the construction of roads 
in Canada and Mexico. 

Thus comes about the fact that, while the bulk of the new 
outstanding railroad bonds bear interest at 6 to 7 per cent., 
with exceptions at 5 and 8 per cent., there is no difficulty 
in now negotiating the mortgages of sound railroads at 4 
per cent., and that may be safely regarded as the future 



THE BURDEN OF FIXED CHARGES. 477 

rate for all meritorious loans. It is not difficult to see to 
what course of things this fact points. If new roads can be 
built on a 4 per cent, ratio of interest charges, then the new 
constructions on that basis and the gradual replacing of 
maturing loans at the same rate will very quickly establish 
a competition between roads thus situated and the large 
mass of companies burdened with the old high rate of 
interest that will bear very seriously on the latter. To a com- 
pany with, say, $40,000,000 of bonded debt, it is a matter of 
a difference of $800,000 per year in fixed charges whether it 
pays 6 per cent, interest or 4 per cent. This difference 
will be so vital in cases of competition between high rate 
roads and low-rate ones, that it will leave no choice, with 
a very important proportion of our railroads, between facing 
financial embarrassment and taking immediate steps for re^ 
adjusting their debts to the new and lower rate of interest. 
As an important proportion of the original bonds issued 25 
to 30 years ago at 6, 7, and 8 per cent, rate by the oldei 
roads are now beginning to mature very rapidly, a larg« 
extent of high-rate debt will from this time forward be 
transmuted into 4 per cent, bonds, which will add force to 
the tendency here indicated. 

Some important results must follow from this new drift 
in railroad investments. One of the effects would naturally 
be a diminution of the current high rate of premium on the 
old bonds, which has become so adjusted as to yield, in 
most cases, a return of 4 to 4^ per cent, on the market value. 
Holders of this class of bonds will perceive that the com- 
panies cannot long sustain the burden of their present high 
rate of fixed charges, and will soon come to discount in ad- 
vance the inevitable " scaling' of their bonds. When the 
railroads begin to feel the effects of competition with the 
low-rate companies, they will not be slow to adjust their 
finances to the new situation ; neither will they be nice 
about their methods of effecting such adjustments ; and the 
rights of creditors will be ruthlessly dealt with under the 



478 RAILROAD INVESTMENTS. 

compulsion of foreclosure; and when this compulsory 
stage is reached, it will not be very long before a large pro- 
portion of the high-rate bonds is transmuted into long 4 
per cent, obligations. 

This very important transition, upon a such large mass of 
investments, is to be anticipated as one of the most con- 
spicuous financial events of the comparatively near future. 
One of its first effects may be expected to appear in a cer- 
tain tone of depression among investors, who will feel them- 
selves impoverished through the fall in the market value of 
their bonds, and by the impending reduction of one-third in 
their income from this class of securities. The bondholders — 
and, indeed, investors generally — will be likely to reason that 
the reduction in the fixed charges of the roads will leave so 
much more available for the stockholders ; and there would 
be this extent of warrant for such a conclusion, that, as the 
stock of a company usually about equals the amount of its 
bonds issues, any reduction in the rate of interest on the 
latter would be just so much per cent, saved towards the 
dividend on share capital. Under such circumstances, there 
would naturally be a marked increase in the demand for rail- 
road stocks, and a large advance in their market value would 
in all probability result. To those who contemplate invest- 
ing in railroad shares, this is a consideration which, it ap- 
pears to me, should claim their consideration. 

It would seem probable that, in the process of conversion 
here foreshadowed, there are the elements of an era of un- 
usual speculative activity at a period not very remote. That 
speculative movement may be expected to consummate and 
finally adjust the change. Naturally, such an excitement 
would tend to produce a great inflation in the price of stocks 
(as distinguished from bonds) ; the final stroke of adjust- 
ment, however, would come ultimately through the construc- 
tion of new competing roads, which would take out of the net 
earnings of the roads as much as had been saved by the 
reduction of interest on their debts, thus leaving the divi- 



INFLATED COST OF RAILROADS. 479 

dend resources where they stood before the change. The 
final issue of this transition, therefore, would be to give the 
public at large about the entire benefit of what the railroads 
saved by the amelioration of their debt charges. 

The tendency I have here aimed to foreshadow is one 
that must largely tend to the public advantage. In other 
words, the railroads, having reduced by 30 to 40 per cent, 
their interest charges, will be in a position to perform their 
services for correspondingly lower charges. This will be an 
invaluable advantage to all our industries, and especially to 
such as have to deal with bulky products, a considerable 
portion of the costs of which consists of charges for trans- 
portation, and the working class, who constitute the bulk of 
our consumers, will be especially benefited. 

In another chapter I have shown how the over-capitaliza- 
tion of our railroads has caused a false and unjust distribu- 
tion of wealth, and burdened our industries with transporta- 
tion charges which are a serious obstacle to our national 
progress. The tendency above delineated shows how seri- 
ously the natural laws governing the distribution of wealth 
provide an ultimate remedy for such violations of these 
laws. The railroad capitalists who have made their millions 
by providing railroads at such an inflated cost are now 
faced with the certain prospect of a loss of one-third of 
their income from their investments ; and that deduction 
will have to be distributed among the community at large in 
the form of cheaper carriage. 

This is but a repetition of what we find so many times in 
the history of nations, that when any important class 
exacts, by some artificial process, a vast amount of wealth 
that does not naturally and justly belong to it, it ultimately 
finds the earning capacity of its accumulations declining. 
This is one among the many reasons why a low rate of in- 
terest is apt to prevail in countries where privileged or 
aristocratic classes have absorbed an undue proportion of 
the national wealth- 



CHAPTER XLIV. 

THE SI LVER QUESTION. 

Its Fundamental Impoktance. — Dangers op Neglecting 
it. — Attempts at Evasion. — How it must be finally 
met. — Silver Paper Currency Schemes, and their 
Futility. 

OF all current public questions, I know of none that 
so vitally affects the future of our financial interests 
as this one — what shall be the status of silver among the 
world's currencies? At the present time, about one-half 
of the world's metallic money consists of silver, and the 
other half of gold. It is clear that silver cannot maintain 
its necessary function as money unless it is invested with 
stability of exchangeable value. Such stability it cannot 
possess without the intervention of a conventional arrange- 
ment which, with all the force of a uniform law, makes a 
given weight of silver virtually exchangeable for a given 
weight of gold. This principle once established, and silver 
bullion being made convertible into silver coin at the mints 
of the chief nations on demand, it follows that the bullion 
value of silver must constantly conform closely to its value 
as coin, and the stability of the value of silver coin would 
thus be insured. 

The difficulty has been that, owing to petty jealousies 
and prejudices, Governments have hesitated to act with the 
unanimity that is necessary to an efficient conventional ar- 
rangement. Each one has preferred that others should take 
the responsibility of free coinage ; and the result has been 
that unrestricted coinage has been adopted only by those 
nations which happened to be most imperatively committed 
to the necessity of protecting their silver circulation. Those 
nations were comprised in the international combination 
known as " The Latin Union." That Union was found com- 



482 THE SILVER QUESTION. 

petent to take care of all the new supplies of silver, so long 
as the principle of free coinage was maintained and the 
value of the metal was kept uniform under its operation. In 
an evil hour, however, certain German theorists persuaded 
Chancellor Bismarck to commit Germany to the demonetiza- 
tion of silver. The large supply of the metal thereby sud- 
denly thrown into the mints of the Union nations alarmed 
that combination, first, into a limitation of their coinage of 
silver, and, finally, into a suspension of it. The coinage de- 
mand for silver being thus cut off, the price of silver bullion 
was cut loose from the relative legal valuation between sil- 
ver coin and gold, and was left to drift with the variations 
in the commercial demand, and to decline in consequence of 
an excess of supply over demand. This is a brief explana- 
tion of the causes of the present depreciation in the value 
of silver. 

I know of no way of repairing the value of that metal 
other than by establishing an international union, similar in 
its objects and conditions to the now virtually defunct Latin 
Union, but embracing a wider range of Governments than 
that combination did ; the co-operation of the United States, 
England and Germany being especially important. Here I 
may perhaps be permitted to republish a series of questions 
propounded by the New York Daily Commercial Bulletin, in 
October last, with my answers appended, as briefly ex- 
pressing the conclusions I have been led to form on this 
question : 

Questions. 

I. Would the stock of gold in the world afford a basis 
broad enough to meet the banking and commercial opera- 
tions of Europe and the United States, without the co-ordin- 
ate use of a properly regulated silver legal tender ? 

II. Would you favor an International Coinage Union, 
embracing the United States and the leading European Gov- 
ernments, based upon a uniform valuation of silver as com- 
pared with gold, and binding each member to coin on de- 
mand all silver presented at its mints and to make such coin 
a legal tender % 



SILVER REQUIRED FOR RETAIL BUSINESS. 483 

III. Supposing the ratio of valuation adopted by such a 
Union to be the present most general one of 15J to 1, do 
you see any reason why the obligation of all nations in the 
Union to convert silver bullion into legal tender coin at 
that rate should fail to restore silver to its former value of 
about 60 pence per ounce ? 

IV. Would the suspension of the coinage of the Silver 
Dollar be judicious, or necessary, or effectual, as a means of 
inducing European Governments to join in an International 
Coinage compact ? 

V. Are there any important reasons connected with the 
finances of the United States Government, with our currency 
system, or with the prospective trade of this country, why 
the coinage of the Standard Dollar should be suspended ? 

IV. Do you favor the immediate suspension of coinage of 
the Silver Dollar % 

Eeplees. 

1. Possibly the existing stocks of gold in Europe and Amer- 
ica might be sufficient to serve the purposes of banking 
reserves and for transmission in the international exchanges; 
but it is impracticable to use such a valuable metal to the 
extent required for the purposes of active circulation, and 
this creates a necessity for a silver legal tender coin for the 
retail transactions of business. For this reason I regard 
the use of silver, co-ordinately with gold, as an indispensable 
element in the world's currency. 

2. I regard an international union as absolutely necessary 
for maintaining the joint use of gold and silver, if the rela- 
tive value between those metals is to be steadily maintained. 
If a uniform value of silver were adopted by members of such 
a union, and if the mint of each nation were bound to coin 
all silver brought to it, and the coins were made a legal 
tender, it appears to me that this would establish a uniform 
value for silver bullion the world over, on a parity with the 
legal valuation of silver coin ; and this conventional value 
of bullion would be preserved as long as the union should be 
continued. Even the limited international arrangement 
known as the Latin Union sufficed to keep silver at about 60 
pence per ounce, until its members, taking fright by the de- 
monetization of silver by Germany, stopped the coinage of 
silver; when, the conventional support being withdrawn 
and the coinage demand suspended, bullion fell to its value 
as a mere commodity. This shows how effective the union 
principle is, and what becomes of silver without it. 



484 THE) SILVER QUESTION. 

3. If an international union were to fix the value of the 
two metals at 15 J weights of silver to 1 of gold, the rate 
now general in Europe, and the members of the union were 
compelled to coin it on demand at that rate, then the free 
convertibility of bullion into coin would necessarily make 
the coin and the bullion of equal value, except the slight 
difference that might arise from coinage charges ; which is 
tantamount to making silver worth about 60 pence an ounce, 
or its former value. 

4. In view of the differences of opinion in Europe on the 
standard question and the strong prejudices in England in 
favor of the gold standard, it appears to me more than 
doubtful whether any step will be taken on this subject 
until those countries are made to carry the burthen of the 
large surplus of silver that we are now coining. But with 
25 to 30 millions of bullion of our silver going thither every 
year, the effect would be so serious upon Asiatic trade and 
upon the immense silver circulation of the Latin nations, 
that it seems certain they would soon become willing to as- 
sume their share in restoring silver. At any rate, it is 
a proper and necessary compulsion for us to apply. 

5. The Government is very closely threatened with a sus- 
pension of gold payments, if the coinage is continued. We 
have already seen a point at which the Treasury had to nego- 
tiate with the banks for six millions of gold to avert that 
catastrophe ; and it is only a thin margin of a very few mil- 
lions that separates us from such a condition all the time. 
Of course, if the Government suspended coin payments, gold 
would be apt to go to an indefinite premium ; with the con- 
sequence of a rush of greenbacks into the Treasury for re- 
demption and a depreciation of such paper as is redeemable 
in silver to the purchasing power of that coin. In my view, 
these dangers are much nearer than is generally supposed ; 
and it is a most unjustifiable policy that needlessly perpetu- 
ates this state of things. 

6. For the reasons assigned in my other answers to your 
inquiries, I regard the suspension of the coinage of the 
the silver dollars as to the last degree imperative. And the 
suspension should be both total and unconditional. Either 
a partial or a temporary suspension would fail equally to 
avert the home dangers with which we are threatened, and 
to bring about that European action which is indispensable 
to a sound and permanent settlement of the question. 



TOO MUCH SILVER COIN. 485 

So long as there was no efficient conventional arrange- 
ment for maintaining the value of silver, no nation can 
safely continue its coinage, because, in so doing, it was in- 
creasing its stock of currency, the future va]ue of which 
could not be depended upon, and which might easily be- 
come a source of embarrassment and injustice between 
citizen and citizen, between debtor and creditor. In our 
country, however, such was the political influence of the silver- 
producing States that they easily induced Congress to order 
the coinage of not less than §24,000,000 per annum of standard 
silver dollars. The effect of this has been, undoubtedly, to 
somewhat check the decline in silver bullion ; but at the 
expense of the artificial addition already of $230,000,000 of 
badly depreciated legal tender to our circulating medium. 
Our whole currency system has thus been vitiated ; for our 
$680,000,000 of paper money may be redeemed in silver ; 
and we are thus exposed to the very gravest dangers, in the 
event of anything causing an important drain of gold to 
Europe. That the coin thus issued was not really needed 
for the purposes of circulation is demonstrated by the fact 
that it has been found impossible to get more than one- third 
of it into circulation. In order to obviate this difficulty, 
various devices have been introduced for keeping the coin 
in the Treasury and issuing against it paper certificates of 
small denominations. The most ingenious of these contri- 
vances was the one proposed by Hon. A. J. Warner, of 
Ohio, and pressed on the Government for its indorsement. 
In September last I took occasion to publish certain objec- 
tions to Mr. "Warner's scheme, which was finally rejected by 
the Silver party; and, with that rejection, there is probably 
an end to all proposals for creating a purely silver paper 
currency. As a brief exposition of one phase of this con- 
troversy, it may perhaps be permissible to reproduce here 
he views then expressed: 

Mr. Warner's measure virtually concedes that the coinage 
of the silver dollar has already been carried to a point that 



486 THE SILVER QUESTION. 

threatens serious danger to the currency system of the coun- 
try, and, consequently, to the just relations between the 
creditor and debtor classes. This confession from a repre- 
sentative of the Silver party does not come a day too soon ; 
and it would be welcome, were it not accompanied with pro- 
posals that would aggravate the evils which need to be 
remedied. Let us briefly examine Mr. Warner's plan. 

First, it discontinues the current monthly coinage of sil- 
ver dollars required under the existing " Bland Act." 2. It 
provides that, in lieu of this current coinage, holders of sil- 
ver bullion may deposit any amount thereof in the United 
States Treasury. 3. It requires that, against such unre- 
stricted deposits of bullion, the Government shall issue to 
the depositors " bullion certificates," expressing an amount 
of money equal to the market value of the bullion at the 
time of its deposit. 4. These certificates are to act as a 
new form of currency. The Government could use them in 
liquidation of all its debts not made expressly payable in 
gold ; and it would be required to accept them in payment 
of customs duties, taxes and public dues generally. The 
national banks would be required to accept them in payments 
between themselves. And, 5, the certificates are made re- 
deemable in lawful money, (i. e., either gold, silver or U. S. 
notes), or at the option of the Treasury in silver bullion at 
its current value at the time of redemption. These are the 
more vital provisions of the scheme. Let us see what they 
involve. 

Against the whole plan there lies a very positive doubt 
of its constitutionality. The Constitution empowers Con- 
gress to authorize the coinage of gold and silver, and to 
make such coins a legal tender ; but there is nothing in the 
powers thus conferred, nor in any powers conveyed by that 
instrument, that can be construed into a right of the Gov- 
ernment to receive silver bullion on deposit. The Govern- 
ment can have no interest, duty or function in connection 
with bullion, except so far as it may be procured for the 
express purpose of coinage. It can have no more power to 
assume the custody of bullion for the accommodation of its 
producers than it has to store cotton, iron or wheat for the 
convenience of the dealers in those commodities. And 
when, in addition to assuming the grave responsibilities of 
custodian, the Government undertakes to issue receipts en- 
dowed with special privileges and attributes, calculated to 



TENDENCY TO SUPPRESS GOI,D PAYMENTS. 487 

incorporate those receipts as an important part of the cur- 
rency system, it commits a breach of the true functions of 
government and of the true constitutional limitations of 
federal authority, which, it would seem, the Supreme Court 
should unqualifiedly prohibit. 

The provision made for the redemption of these proposed 
certificates would be to the last degree objectionable. They 
are payable in legal tender money, or, at the option of the 
Government, in an equivalent value of silver bullion at its 
current market price. If the Government chooses to redeem 
them in lawful money, it exposes itself to a new and im- 
portant demand upon its legal tender notes or its gold : 
and as the amount of greenbacks owned by the Treasury 
now runs so low as to prohibit those notes being used for 
the purpose, it follows that the redemption of the certifi- 
cates would have to be made from the Treasury stock of 
gold. Thus the operation of the scheme would be to ex- 
change the Government gold for silver bullion. What could 
the silver men desire better ? What could all other interests 
dread more ? It would be a direct step towards incapacitat- 
ing the Government for maintaining gold payments ; and, as 
such, would go far towards dissipating that broad substratum 
of gold which is the sole means of preventing our entire 
paper currency from depreciating to a level with the bul- 
lion value of the silver dollar. 

It is thus clear that the Government would be ultimately 
driven to redeem the certificates in silver bullion. What 
does that imply ? First, that the Treasury would have to 
stand the loss upon the deposits of bullion that might arise 
from a fall in its value. Take a case for illustration. A 
deposit is made of 1,000,000 ounces of gold at the current 
price of $1.10 per ounce, the Treasury being required to 
issue against it $1,100,000 of certificates. Later, when the 
price of silver has fallen to say $1.05, the $1,100,000 of cer- 
tificates is presented for redemption, and 1,047,619 ounces 
of silver have to be delivered, as the bullion equivalent at 
the current market value. The Government thus loses 47,- 
619 ounces of silver by the transaction. Now, seeing what 
a handsome profit can be made by thus depositing bullion 
at a higher price and withdrawing it at a lower, are men so 
virtuous that we can depend on their not working this Treas- 
ury silver mine to the utmost possible advantage \ With the 
hands of the Government thus tied, it would be at the mercy 



488 THE SILVER QUESTION. 

of unprincipled speculators and could not escape being 
mulcted to the extent of millions of dollars. The moment 
such a bill was signed by the President, speculative combi- 
nations would be formed with London bullion dealers ; the 
European stocks would be secured, and, after advancing the 
price, would be sent to the United States Treasury. The 
next step would be to force down the price ; and then the 
certificates would be presented to be redeemed by a much 
larger quantity of silver than had been deposited against 
them. And thus the game would go on continuously, the 
Government being the loser in every transaction. A finer 
scheme for the benefit of speculators could not have been 
conceived ; but for legitimate interests, in many ways de- 
pendent on the value of silver, nothing could be more 
serious. 

There is nothing in Mr. Warner's measure to prevent the 
United States Treasury from being saddled with as much 
of the European stocks of silver as speculators find it to 
their interest to send here, in addition to the product of our 
own mines ; and for such deposits the Treasury would be 
compelled to pay whatever artificial price it suited the 
operators to determine. And what does such a transfer in- 
volve ? First, that we should have to ship so much more 
gold to Europe, making the operation a virtual exchange 
of Europe's silver for America's gold ; next, that the United 
States Government would thus be made to bear the sole 
weight and responsibility of carrying the world's surplus 
of silver ; next, that, as a consequence, England, Germany, 
and other nations would become still more reluctant than 
they now are to negotiate for an international settlement of 
the silver question ; next, that the Government would be so 
handicapped with its enormous load of silver as to place it 
at an utter disadvantage in such negotiations ; next, that the 
Government would be exposed to immense losses in assum- 
ing such vast responsibilities ; and, next, that the large issues 
of certificates to be made against this mass of bullion would 
be a forcible and artificial inflation of the currency, which 
could not fail to produce disaster to all the material inter- 
ests of the country. 

Of course, such an arrangement would be all that the sil- 
ver interests could desire. For them, indeed, it would be a 
far better protection than the Bland Act. But this advan- 
tage would be only temporary ; for when the scheme broke 



REPEAL OF THE COINAGE ACT NECESSARY. 489 

down of its own weight, as sooner or later it must, the 
miners would be exposed to ruin from the consequent de- 
rangements. 

The only wholesome treatment of this question is to 
repeal the Silver Coinage Act. That done, we should add 
$25,000,000 to our yearly exports, instead of locking up so 
much of our national product as dead capital in the Treas- 
ury ; while that increase of exports would give us a greater 
command of European gold and thereby strengthen our in- 
ternational position in this question. Europe, and especial- 
ly England, would then be compelled to earnestly consider 
measures for placing the double standard upon a broad and 
lasting international basis ; and as such a disposition began 
to manifest itself, the silver market would so far sympathize 
as to amply compensate producers for any losses they might 
suffer from a temporary fall in bullion. 

Heney Clews. 

Bad as the situation is, in respect to this vast mass of the 
world's circulating medium, yet it is far from being a hope- 
less one. The more serious it becomes, the nearer will be 
the remedy. The derangements to commerce and to immense 
vested interests must ultimately become so serious, that the 
nations which now obstruct the application of a remedy will 
be compelled to submit to the necessities of an imperative 
danger, and the end will probably be that a coinage union 
will be established between the great nations, on a basis 
broad enough to give stability to this form of money beyond 
all possibility of future disturbance. 



CHAPTEE XLV. 

THE LABOR QUESTION. 

Habmony Between the Eepeesentatives op Capital and 
Labor Necessary for Business Prosperity. — If Man- 
ufacturers should Combine to Kegcjlate Wages, 
the Arrangement Could only be Temporary. — The 
workingmen are taken care of by the natural 
Laws of Trade. — Competition Among the Capital- 
ists Sustains the Bate of Wages — Opinion of John 
Stuart Mill on this Subject. — Compelling a Uni- 
form Bate of Pay is a Gross Injustice to the Most 
Skilful Workmen.— The Tendency of the Trades 
Unions to Debar the Workingman from Social Ele- 
vation.— The Power of the Unions Brought to a 
Test. — The Universal Failure of the Strikes. — 
Bevolutionary Demands of the Knights of Labor. — 
Gould and the Strifes on the Missouri Pacific, 
&c <fcc. 

THEBE is no influence to which business circles are 
more sensitive than the disruption of harmony be- 
tween capital and labor. Whatever affects the productive- 
ness of labor affects, more directly than any other cause, 
the national prosperity and the welfare of all classes of 
society. The value of the vast aggregate of corporate prop- 
erty represented on the Stock Exchange is vitally depend- 
ent on the maintenance of such relations between the em- 
ployed and employing classes as contribute to the highest 
welfare of both and to the largest possible national produc- 
tion ; and, therefore, whatever tends to imperil such rela- 
tions becomes a source of serious disturbance to the stock 
market, to financial interests at large, and to the best inter- 
ests of labor itself. 

There appears to be an idea, in certain quarters, that the 
modern concentration of capital into large masses has made 
it necessary for workmen also to organize themselves into 



492 TH£ LABOR QUESTION. 

large bodies, sinking their individual rights and liberties 
and selling their labor en masse. For my part, I am unable 
to see the force of this reasoning, although I cannot but 
respect the ability of some authorities by which it is sanc- 
tioned. It seems to assume that large employers .of labor 
have more power to depress wages than smaller ones ; and 
from this it is inferred that it is necessary for workmen to 
combine to protect themselves against this supposed in- 
creased exposure to aggression from capital. But is either 
the premise or the conclusion sound ? In order to concede 
the assumption we must suppose that large employers can 
cease to be competitors for labor ; for in no other way can 
they depress wages. But this can never happen ; for capi- 
talists will always produce to the fullest extent compatible 
with an average rate of profit, and this ensures the largest 
possible demand for labor and, therefore, the highest pos- 
sible rate of wages. If employers combined to force the 
rate of wages down, as workmen do to force it up, they would 
undoubtedly be able to compel a temporary reduction in the 
remuneration of labor. 

But, of necessity, such an artificial depression of wages 
could only be temporary ; for what was thus taken by force 
from labor would make manufacturing so unusually profit- 
able that new capital would be immediately attracted to it, 
and the consequent additional demand for labor would 
necessitate an advance in wages, which the combined manu- 
facturers would be compelled to pay. As a matter of fact, 
manufacturers do not combine to regulate wages, not only 
because of the reasons just stated, but also because they 
know that no such combination could be maintained in the 
face of the jealousies and conflicting interests that always 
exist among them. If, then, it is true that manufacturers 
are compelled by the necessities of competition to pay as 
much for labor as it is for the time-being worth, and, if they 
do not and cannot combine to depress wages, I am unable 
to see where arises the necessity for the workmen to com- 



FAI^SK NOTIONS ABOUT COMPETITION. 433 

bine for the purpose of protecting themselves against cap- 
ital. 

The workingmen are taken care of by the natural laws of 
trade far more perfectly than they can be by any artificial 
arrangement ; and trades unions are simply an intrusion 
upon the domain of those laws, without the power to sup- 
plement or perfect their operation, and with a certainty of 
obstructing and perverting their tendency, with the inevit- 
able result of mischief to all parties. If the unions do occa- 
sionally get an advance in wages, it would have come by 
the natural laws of competition among the capitalists. It 
might be delayed for a time, but if you calculate the loss of 
wages and suffering entailed by the strike, I think the 
workmen would be safer in the end to wait for the natural 
advance. I am clearly borne out in this view of the case 
of the capitalist by that great political economist, philoso- 
pher and thinker, John Stuart Mill, who was certainly no 
enthusiastic friend of the capitalist, and is an acknowledged 
friend of labor as widely as his writings are known, which 
is almost as extensive as civilization itself. 

After laying down the principles of Socialism, Mill says : 
" Next, it must be observed that Socialists generally, and 
even the most enlightened of them, have a very imperfect 
and one sided notion of the operation of competition. They 
see half its effects, and overlook the other half ; they regard 
it as an agency for grinding down every one's remuneration 
— for obliging every one to accept less wages for his labor, 
or a less price for his commodities, which would be true 
only if every one had to dispose of his labor or his commodi- 
ties to some great monopolist, and the competition were all on one 
side. They forget that competition is the cause of high 
prices and values as well as of low ; that the buyers of labor 
and of commodities compete with one another as well as the 
sellers ; and that if it is competition which keeps the prices 
of labor and commodities as low as they are, it is competition 
which prevents them from falling still lower. In truth, 
when competition is perfectly free on both sides, its tendency 
is not specially either to raise or to lower the price of ar- 
ticles, but to equalize it ; to level inequalities of remuner- 



494 THE LABOR QUESTION. 

ation, and to reduce all to a general average, a result which, 
in so far as realized (no doubt very imperfectly), is, on 
Socialistic principles, desirable. But if, disregarding for 
the time that part of the effects of competition which consists 
in keeping up prices, we fix our attention on its effect in 
keeping them down, and contemplate this effect in reference 
solely to the interest of the laboring classes, it would seem 
that if &>mpetition keeps down wages, and so gives a motive 
to the laboring classes to withdraw the labor market from 
the full influence of competition, if they can, it must on the 
other hand have credit for keeping down the prices of the 
articles on which wages are expended, to the great advantage 
of those who depend on wages. To meet this consideration 
Socialists, as we said in our quotation from M. Louis Blanc, 
are reduced to affirm that the low prices of commodities 
produced by competition are delusive, and lead in the end 
to higher prices than before, because when the richest 
competitor has got rid of all his rivals, he commands the 
market and can demand any price he pleases. Now, the 
commonest experience shows that this state of things, under 
really free competition is wholly imaginary. The richest 
competitor neither does nor can get rid of all his rivals, and 
establish himself in the exclusive possession of the market ; 
and it is not the fact that any important branch of industry 
or commerce formerly divided among many has become, or 
shows any tendency to become, the monopoly of a few. 

The kind of policy described is sometimes possible where, 
as in the case of railways, the only competition possible is 
between two or three great companies, the operations being 
on too vast a scale to be within the reach of individual 
capitalists ; and this is one of the reasons why businesses 
which require to be carried on by great joint-stock enterpri- 
ses cannot be trusted to competition, but, when not reserved 
by the State to itself, ought to be carried on under conditions 
prescribed, and from time to time, varied by the State, for 
the purpose of insuring to the public a cheaper supply of 
its wants than would be afforded by private interest in the 
absence of sufficient competition. But in the ordinary 
branches of industry no one rich competitor has it in his 
power to drive out all the smaller ones. Some businesses 
show a tendency to pass out of the hands of many small 
producers and dealers into a smaller number of larger ones ; 
but the cases in which this happens are those in which the 



injustice; of uniform rate of wages. 495 

possession of a larger capital permits the adoption of more 
powerful machinery, more efficient, by more expensive pro- 
cesses, or a better organized and more economical mode of 
carrying on business, and thus enables the large dealer 
legitimately and permanently to supply the commodity 
cheaper than can be done on the small scale ; to the great 
advantage of the consumers, and therefore of the laboring 
classes, and diminishing, pro tanto. the waste of the resources 
of the community so much complained of by Socialists, the 
unnecessary multiplication of mere distributors, and of the 
various other classes whom Fourier calls the parasites of 
industry. "When this change is effected, the larger capital- 
ists, either individual or joint-stock, among which the 
business is divided, are seldom, if ever, in any considerable 
branch of commerce, so few as that competition shall not 
continue to act between them ; so that the saving in cost, 
which enabled them to undersell the small dealers, continues 
afterwards, as at first, to be passed on, in lower prices, to 
their customers. The operation, therefore, of competition 
in keeping down the prices of commodities, including those 
on which wages are expended, is not illusive but real, and 
we may add, is a growing, not a declining fact." 

One principle of the unions is exceedingly unjust to the 
workingmen to the last degree. It starts with the assump- 
tion that all workmen are equal in their capacity as to the 
quality of service or work and the quantity of production ; 
and upon this false assumption is based the injustice of 
compelling all members to bind themselves to a uniform 
rate of pay. A greater injustice and a more flagrant in- 
equity cannot be found in the whole range of the world's 
social institutions ; nor is the wrong the less culpable be- 
cause the members voluntarily inflict it upon themselves ; 
for as " no man liveth unto himself " but has dependents 
for whom he is bound to do the best in his power, so no 
man is free to throw away to the less industrious or less 
competent what his superior abilities and industry have 
earned for himself. 

This levelling system is not only in defiance of the law of 
varied endowment which the Creator has incorporated into 



496 THK LABOR QUESTION. 

the constitution of humanity, but it tends to bind into one 
cast-iron man the entire working community, debarring them 
from all chances of progress and consigning them to a de- 
grading condition of semi-slavery or serfdom. Time was 
when the way was clear to any w orkingman in this country 
to the highest positions of wealth, or of social standing or 
political influence. As a matter of fact, a large proportion 
of our present successful merchants, and not a few even of 
our millionaires, are men who have risen from the ranks of 
labor. The first steps in their progress were won by the 
superiority of their skill or faithfulness as workmen, which 
qualified them to rise step by step to higher achievements. 
Then, the workman was free to rise according to his abil- 
ities and his character ; he was the free ruler of his own 
destiny. Now, it seems the tendency of the trades unions 
is to obliterate all such distinctions and virtually debar the 
workman from the possibility of earning a rank among his 
fellowmen proportioned to his merits ; and on this plan the 
American workman would be as completely cut off from the 
chances of social elevation, as was the American slave 
twenty-five years ago. This would be a terrible degrada- 
tion, of which every man who enjoys the rights of American 
citizenship should deem himself incapable and feel ashamed. 
However much political leaders, and even some who re- 
joice in the reputation of economists, may feel disposed to 
regard these combinations as a social necessity of the time, 
and an institution that has come to stay, I cannot resist the 
conviction that the trades-union movement has already seen 
its culmination and is destined to a steady disintegration, 
unless the system is greatly modified. The principle of 
combination is useless unless it can be successfully em- 
ployed to compel employers to accept the terms of the 
employees. In fact, it has been almost the sole object of 
the unions to employ it, through the agency of strikes, to 
compel the acquiescence of capital , Up to a recent period, 
it has been largely successful in this sense. So long as em- 



BRINGING TRADES-UNIONS TO A TKST. 



497 



ployers could at all afford to comply with the demands of 
labor, they would make considerable sacrifices to avoid the 
inconvenience and loss connected with the interruption of 
their operations involved in a strike. At last, however, the 
workingmen advanced their demands to a pitch so seriously 
threatening to industry and so vitally dangerous to the ma- 
terial interests of the country at large, that employers saw, 
with common consent, that the time had come when a 
square issue must be made with this modern invasion on 
their rights. 

The spring of 1886 will always be memorable, for its 
having brought to a fair test the power and principles of 
trades -unionism. Strikes were suddenly initiated on a 
stupendous scale, upon the railroads, among the western 
factories, and among the larger employers in the Middle 
States, partly to enforce demands for higher wages, partly 
to shorten the time of work to eight hours a day, and above 
all, to compel employers to recognize the leaders of the 
unions in determining the conditions of employment and 
to submit all disputes between the two parties to arbitration. 
Employers, simultaneously, but without any concert of 
action, met the challenge squarely. They refused to con- 
cede the demands made ; they in many instances declined 
to recognize the officers of the unions ; they proceeded 
promptly to fill the places of the strikers with non-union 
men, and refused to make formal conditions with returning 
strikers ; they brought to bear upon the leaders of the 
strikes the laws against conspiracy ; and they took the 
" boycotters " before the courts. The result of this treat- 
ment was an almost universal failure of the strikers ; the 
declaration by the courts that the compulsory methods of 
the unions are illegal, and in the nature of conspiracies ; 
the throwing out of employment of tens of thousands of 
union employees, and the exhaustion of the funds raised 
by the unions for enforcing their coercive tactics. 

The result of the contest was that, within one brief month, 



498 THE LABOR QUESTION. 

the power of the unions was shown to be weakness itself ; 
employers everywhere discovered the intrinsic importance 
of the combinations they had so much before dreaded, and 
very many respectable and reflecting members of the unions 
felt themselves discredited in the eyes of the public, while 
their faith in the efficiency of their system of supposed pro- 
tection was seriously shaken. After this, if I am not 
seriously mistaken, employers will find that they have much 
less to fear from trades-unions than they had once supposed. 
A defeat so fundamental as this, is likely to be followed by 
the gradual dispersion of the formidable array of united 
workmen. Such a result is no more than is to be reasonably 
expected from an organization based upon no great truth 
and no sound principle, but resting upon popular ignorance 
and misconception of the natural laws governing society. 

During the progress of the recent strikes, I had occasion 
to make frequent allusions to the course of events, from 
which I may be permitted to make the following quota- 
tions : 

(The following appeared on the 3d of May.) 

Ci The Knights of Labor have undertaken to test, upon a 
large scale, the application of compulsion as a means of 
enforcing their demands. The point to be determined is, 
whether capital or labor shall, in future, determine the 
terms upon which the invested resources of the nation are 
to be employed. 

" To the employer it is a question whether his individual 
rights as to the control of his property shall be so far over- 
borne as not only to deprive him of his freedom, but also 
expose him to interference seriously impairing the value of 
his capital. To the employees, it is a question whether, by 
the force of coercion, they can wrest, to their own profit, 
powers and control, which, in every civilized community, 
are secured as the most sacred and inalienable rights of the 
employer. 

" This issue is so absolutely revolutionary of the moral 
relations between labor and capital, that it has naturally 
produced a partial paralysis of business, especially among 
industries whose operations involve contracts extending into 



THE knights and their friends. 



499 



the future. There has been at no time any serious appre- 
hensions that such an anarchical movement could succeed, so 
long as American citizens have a clear perception of their 
rights and their true interests ; but it has been distinctly 
perceived that this war could not fail to create a divided, if 
not a hostile feeling, between the two great classes of society; 
that it must hold in check not only a large extent of ordin- 
ary business operations, but also the undertaking of those 
new enterprises which contribute to our national progress, 
and that the commercial markets must be subjected to 
serious embarrassments. 

" From the nature of the case, however, this labor disease 
must soon end one way or another ; and there is not much 
difficulty in foreseeing what its termination will be. The 
demands of the Knights and their sympathizers, whether 
openly expressed or temporarily concealed, are so utterly 
revolutionary of the inalienable rights of the citizen, and so 
completely subversive of social order, that the whole com- 
munity has come to a firm conclusion that those pretensions 
must be resisted to the last extremity of endurance and 
authority ; and that the present is the best opportunity for 
meeting the issue firmly and upon its merits. The organi- 
zations have sacrificed the sympathy which lately was 
entertained for them, on account of inequities existing in 
certain employments ; they stand discredited and distrusted 
before the community at large as impracticable, unjust and 
reckless ; and, occupying this attitude before the public, 
their cause is gone and their organization doomed to failure. 
They have opened the flood gates to the immigration of for- 
eign labor, which is already pouring in by tens of thousands; 
and they have set a premium on non-union labor, which will 
be more sought after than ever, and will not be slow to secure 
superior earnings by making arrangements with employers 
upon such terms and for such hours as may best suit their 
interests. Thus, one great advantage will incidentally 
come out of this crisis beneficial to the workingman, who, 
by standing aloof from the dead-level system of the unions, 
will be able to earn according to his capacity, and thereby 
maintain his chances for rising from the rank of the em- 
ployee to that of the employer. This result cannot be long 
delayed, because not only is loss and suffering following 
close upon the heels of the strikers, but the imprudences of 
their leaders are breeding dissatisfaction among the rank 



590 THE LABOR QUESTION. 

and file of the organizations, which if much further pro- 
tracted, will gravely threaten their cohesion. It is by no 
means certain that we may not see a further spread of 
strikes, and possibly with even worse forms of violence thai 
we have yet witnessed ; but, so long as a way to the end k 
seen, with a chance of that end demonstrating to thf 
organizations that their aspirations to control capital aro 
impossible dreams, the temporary evils will be borne with 
equanimity. The coolness with which the past phases of 
the strikes have been endured, shows that the steady 
judgment of our people may be trusted to keep them calm 
under any farther disturbance that may arise. 

u Prior to the strike in the Missouri Pacific, Jay Gould was 
one of the most hated men in the people. He was anxious 
to have public respect and sympathy. He had made all the 
money he wanted, and was willing to spend part of it in 
gaining the respect and honor of the country. What his 
money could not do for him this strike on the Missouri 
Pacific has done. The sympathy and good-will which pre- 
viously were with the strikers have been shifted from them to 
him. There is no doubt that the strikers selected the Mis- 
souri Pacific because it was a property with which Gould 
was known to be most largely identified, and because they 
thought that general execration would be poured out on him 
in any event. But, instead of injuring Mr. Gould, they have 
done him inestimable service. 

"The timely and forcible action of Mayor Harrison, of 
Chicago, will put dynamiters and rioters where they belong, 
and thus divide the sheep from the goats in a very short 
time. If officials would sink political bias, the country 
would soon be rid of law-breakers and disturbers of the 
peace. As this plan of treatment has now been adopted, it 
will be far reaching in its effect, and stop mob gatherings, 
riotous speech-making, and other such bad incentives, which 
recently have been so conspicuous in Chicago, Milwaukee, 
St. Louis, and elsewhere. The laboring classes, who are 
parties to the strike, will now have an opportunity to retire 
to their homes, where there will be more safety than in the 
streets, which will bring to them reflection. They will then 
soon become satisfied that they are the aggrieved parties, 
and the not unlikely result will be their turning upon their 
leaders, who have deceived them. 

" There have been numerous vacancies created bv the strik* 



PEACEFUL STRIKES HARMLESS. 501 

ers voluntarily resigning. There has been no difficulty in 
filling these vacancies by those who are equally capable, if 
not more so, from other countries flocking to our shores. 
The steam ferry between this country and Europe has de- 
monstrated this by the steamer just arrived in six days and 
ten hours from European shores to our own. As the separa- 
tion between the oppressed operatives of the Old World and 
America is thus reduced to hours, Europe will quickly 
send to us all the labor we need to meet all such emergen- 
cies. 

" The laboring man in this bounteous and hospitable 
country has no ground for complaint. His vote is poten- 
tial, and he is elevated thereby to the position of man. 
Under the government of this nation, the effect is to ele- 
vate the standard of the human race and not to degrade it. 
In too many other nations it is the reverse. What, there- 
fore, has the laborer to complain of in America \ By excit- 
ing strikes and encouraging discontent he stands in the way 
of the elevation of his class and of mankind. 

" The tide of emigration to this country, now so large, 
makes peaceful strikes perfectly harmless in themselves, be- 
cause the places of those who vacate good situations are 
easily filled by new-comers. When disturbances occur 
under the cloak of strikes it is a different matter, as law and 
order are then set at defiance. The recent outbreaks in 
Chicago, which resulted in the assassination of a number of 
valiant policemen through a few cowardly Polish Nihilists 
firing a bomb of dynamite in their midst, was the worst 
thing that could have been done for the cause of the pres- 
ent labor agitation, as it alienates all sympathy from them. 
It is much to the credit, however, of Americans and Irish- 
men that, during the recent uprisings, none of them have 
taken part in any violent measures whatsoever, nor have 
they shown any sympathy with such conduct. 

" If the labor troubles are to be regarded as only a tran- 
sient interruption of the course of events, it is next to be 
asked, what may be anticipated when those obstructions dis- 
appear? We have still our magnificent country, with all 
the resources that have made it so prosperous and so pro- 
gressive beyond the record of all nations. There is no 
abatement of our past ratio of increase of population ; no 
limitation of the new sources of wealth awaiting develop- 
ment ; no diminution of the means necessary to the utiliza- 



502 THE LABOR QUESTION. 

tion of the unbounded riches of the soil, the mine, and the 
forest. Our inventive genius has suffered no eclipse. In 
the practical application of what may be called the commer- 
cial sciences, we retain our lead of the world, As pioneers 
of new sources of wealth, we are producing greater results 
than all the combined new colonizing efforts which have re- 
cently excited the aspirations of European governments. To 
the over-crowded populations of the Old World the United 
States still presents attractions superior to those of any 
other country, as is demonstrated by the recent sudden re- 
vival of emigration from Great Britain and the continent to 
our shores." 



CHAPTEE XLYI. 

AN IMPORTANT SYNOPSIS. 

A Eesume in Beief of the Leading Events Connected 
with Wall Street Affairs for Seventy-seven Tears. 

December, 1816.— The first savings banks in the United 
States went into operation. 

July, 1820. — Great financial distress throughout America. 
The causes were excessive importations and a deranged cur- 
rency. 

August, 1833. — There was great commercial distress, 
caused by contraction by the United States Bank. The 
bank defended its course on the ground of the evident hos- 
tilities of the Administration, the public deposits, amount- 
ing to $10,000,000, having been withdrawn by order of the 
President. 

May, 1837. — In this year commercial distress prevailed 
throughout the United States. On May 10th all the banks 
in New York city, by common consent, suspended specie 
payments, banks throughout the country following the ex- 
ample. In New York about 300 large failures took place. 
In Boston 168 failures were reported. In New Orleans 
houses stopped payment owing an aggregate of $27,000,000. 

May, 1838. — The banks of New York and New England 
resumed payment after the suspension due to the panic of 
1837. The Philadelphia banks resumed in August, 1838, 
and in January, 1839, there was nominal resumption 
throughout the country. 

July, 1840. — The bill organizing the United States Sub- 
Treasury became a law. The act was repealed in 1841, but 
was re-enacted in 1846. 



504 AN IMPORTANT SYNOPSIS. 

October, 1842. — The first submarine telegraph cable, the 
invention of Prof. Morse, was laid between Governors* 
Island and the Battery, New York, October 18th. 

January, 1844. — The first telegraph line in the United 
States was erected. The telegraph was invented by Morse 
in 1837. 

August, 1851. — The depression of this year reached its 
height on the 13th. A bad credit system had been in vogue, 
trade with California had not met expectations, imports had 
been large, exports of gold heavy, cotton declined in Europe, 
the banks contracted, property was sacrificed to raise ready 
money, mercantile credit was disturbed everywhere, and dis- 
tress was general in all the cities. In Wall street large 
blocks of stock were unloaded and the market was broken. 
Erie went from 90 to 68 J. Later in the month money be- 
came easier, prices advanced, and the market resumed its 
ordinary aspect. 

October, 1851. — Panic regarding the value of State money. 
The Metropolitan Bank made war on the country banks to 
compel them to deposit with it against their notes, which 
were extensively circulated in the city. After receiving 
their bills the Metropolitan Bank demanded their redemp- 
tion in specie. This led to many suspensions. The bills 
were well secured by State stocks, and the Metropolitan 
continued to receive them As brokers refused to take 
State moneys of any kind there was a rush to the Metropol- 
itan, and a panic prevailed. Ultimately the brokers bought 
the bills at a discount and made large profits. Their pur- 
chases gradually restored confidence, but not before four 
country banks had failed. 

July, 1853. — A panic in the stock market in consequence 
of bank contraction. The State Legislature enacted that 
the banks should publish weekly, in the New York Times, 
statements of their condition. la preparing for this state- 
ment the banks called in a large portion of their loans, and 



THE HUNTINGTON FORGERIES. 505 

ran after each other for specie. The panic was of short 
duration. 

October, 1853. — Simeon Draper, a railroad banker, failed. 
-Stocks were depressed on the 19th, in consequence of 



bank contraction. There were several failures. 

January, 1854. — California defaulted in its interest on the 
1st, and there was much alarm in financial circles in conse- 
quence. 

February, 1854.— Heavy failures in California. 

May, 1854.— The New York, Newfoundland & London 
Telegraph Company was organized, and was the first com- 
pany to attempt Atlantic cable telegraphy. 

July, 1854. — Bobert Schuyler, President of the New York 
& New Haven Kailroad Company, fraudulently issued nearly 
$2,000,000 stock of the company. About the same time 
fraudulent entries, made by Secretary Kyle, were discovered 
in the stock ledger of the Harlem Company, amounting to 
about $470,000. Frauds were also discovered in the affairs of 
the Parker Vein and the Vermont Central railway companies. 
In consequence there was a rapid decline in the stock mar- 
ket, and many suspensions occurred in New York, Boston 
and Philadelphia. * 

September, 1854. — A severe twist in Erie stock on the 13th. 

October, 1854. — Frauds on the Ocean, American Exchange 
and National banks were discovered. 

December, 1854 — There was a severe run on the savings 
banks of the city of New York on the 9th. 

September, 1855. —A financial panic in San Francisco and 
many failures of prominent bankers. 

September, 1856. — Charles B. Huntington committed for- 
geries amounting to $15,000,000 or $20,000,000. The forger- 
ies were used as collateral security for raising money, and 
for a time were taken up before maturity. 



506 AN IMPORTANT SYNOPSIS. 

April, 1857. — Freight- train men on the Baltimore & Ohio 
struck. Trains were molested and many fights occurred. 
The military were called out and a desperate fight ensued, 
in which many were killed and wounded. 

August, 1857. — The financial panic of this year began on 
the failure of the Ohio Trust Company, with liabilities about 
$7,000,000. Banks either failed or suspended specie pay- 
ments everywhere. The New York banks resumed in De- 
cember. Business was generally prostrated until the 
following spring, when improvement became perceptible. 

July, 1860. — Congress authorized a war loan of $250,000,- 
000. The National debt was $64,640,838.11 It reached 
$2,756,431,571, its greatest point, in 1885. 

August, 1860. — Treasury notes to the amount of $50,000,- 

000 were authorized by Congress. The first well ever sunk 

for oil, and the first petroleum ever obtained by boring. 
The well was at Titusville, Oil Creek, Pa. It gave 1,000 
barrels a day. This was the beginning of the petroleum 
business. 

December, 1860. — The Southern banks suspended specie 
payment on the 12th. 

April, 1861. — The lowest price at which United States 
bonds sold during the war was 75 for the 5s of 1874, quoted 
in this month. 

December, 1861. — The National Bank system was recom 

mended by Secretary Chase. A premium for gold was 

quoted at the New York Stock Exchange for the first time, 
on the 30th. 

April, 1862. — Gold was first quoted at a premium on the 
12th, and by October 1 it had advanced to 123. 

February, 1864. — Speculation in stocks was "rampant" 
and "wild." 



GOI,D SPECULATION AND PANICS. 507 

March^ 1864. — There was a panic in the coal stocks on the 
10th. The month was noted for a rapid rise in gold. 

April, 1864. — A semi-panic in Wall street on the 18th. 

June, 1864. — National currency to the amount of $300,- 
000,000 was authorized by Congress. The full amount was 
issued before the close of 1867. 

August, 1864. — Gold touched 261J, its highest point. 

July, 1865.— The Stock Exchange made a rule inflicting a 
penalty on members who attended Gallaher's up- town night 
Exchange. 

August, 1865. — Edward B. Ketchum, a junior partner !n a 
prominent banking house in New York, forged gold certifi- 
cates to the extent of $1,500,000, and they were negotiated 
at the banks. In addition he abstracted more than $3,000,- 
000 from the vaults of the firm. The firm failed- 

October, 1865. — Call loans were made as high a per 
cent, and a heavy commission added. Tight money checked 
a rise in stocks. Money was wanted in the West for the 
moving of crops. Belief came on the demand from the West 
subsiding, and by temporary loans from the Sub-Treasury 
to the banks. 

November, 1865. — Prairie du Chien common stock was cor- 
nered. On the 6th 29,000 shares were bought at about 40. 
The trap being sprung 200 and more was demanded, and the 
shorts settled at rates ranging from 110 to 210. There were 
several failures. It opened on a Monday at 96 ; on Tues- 
day it ranged between 160 and 225, and closed on Saturday 
at 110. 

December, 1865. — The new Stock Exchange building was 
opened for business on the 9th. 

February, 1866. — Toward the close, on February 20th, 
everybody seemed to want to borrow money, and no one was 
willing to lend. The market verged on panic. People were 



508 AN IMPORTANT SYNOPSIS. 

afraid of the course of the Government in selling upwards 
of $12,000,000 gold 

April, 1866. — Michigan Southern was cornered. The price 
rose from 84 to 104. The pool closed out and the price 
dropped to 80 within 24 hours. Other corners were made 
in the same month in Beading, Eock Island, Hudson Kiver, 
Cleveland & Pittsburg and Northwestern preferred. Money 
was plentiful and speculation was rampant. 

May, 1866. — The marketing of Erie stock by Daniel Drew 
caused a drop in its price from 74£ on May 18th to 60^ on 
May 31st. The movement had very little effect on the re- 
mainder of the market. 

July y 1866. — A panic in stocks followed the failure of 
Overund, Gurney & Co., London bankers. 

August, 1866. — London markets were first quoted by At- 
lantic cable in New York. 

November, 1866. — There was heavy speculation in stocks, 
produce, dry goods and real estate. Poor men became 
rich by a single turn of the wheel. Unexpectedly the Treas- 
ury drew about $15,000,000 for its own purposes, money 
became tight and the bears became very active. Prices de- 
clined about 10 points, and outsiders lost upwards of $25,- 
000,000. 

December, 1866. — Northwestern preferred and Cumberland 
Coal were cornered. 

January, 1867. — Prices broke on the 18th with a rush. 
Cumberland Coal declined 55 points, and the general list 
went off in sympathy. There were several failures. Money 

was tied up by bear operators. President Yelverton, of 

the Bank of North America, on learning of the failure of 
A. J. Meyer & Co., the firm having overdrawn its account 
$219,000, was seized with apoplexy and died. 



FAMOUS POOLS AND CORNERS 50 ^ 

May, 1867. — A pool in Erie was broken by the sale of a 
large block of English stock. 

October, 1867. — Daniel Drew was turned out of Erie, and 
the stock advanced 10 points. 

December, 1867. — Vanderbilt secured control of New York 
Central. 

January, 1868. — A corner in Rock Island was broken, 
owing to the company throwing 49,000 shares on the mar- 
ket . The stock declined heavily. 

February, 1868. — The contest between Drew, Vanderbilt 
and Frank Worth was at its height. 

April, 1868.— There was a break in Atlantic Mail, with 
subsequent complications. 

June, 1868.— An unsuccessful attempt to corner Pacific 
Mail was made. 

July, 1868. — Jay Gould became president of Erie. 

October, 1868. — Money became stringent, owing to the 
withdrawal of funds from New York for the West. The 
associated banks lost $20,000,000 in deposits and $12,000,000 
in legal tenders, with a reduction of only $9,000,000 in loans. 
Special efforts were made to break the stock market, but 
the bull leaders had provided themselves with time loans, 
running to the end of the year, and were thus enabled to 
hold prices. 

November, 1868. — Erie was cornered, and a panic extend- 
ing through the whole list occurred. It was helped by the 
inability of a leading operator, a director of St. Paul, to 
meet puts on that stock. The common and preferred fell 
about 20 points. Erie made an extraordinary issue of 
shares. Later on money became more plentiful, prices 
advanced and the market became very strong. 



510 AN IMPORTANT SYNOPSIS. 

April, 1869. — A bill to consolidate the New York Central 
and the Hudson Kiver railroad companies passed the Legis- 
lature. 

Mai/, 1869.— The New York Stock Exchange and the 
Open Board of Brokers were amalgamated under one man- 
agement. The new Exchange began business with 1,030 
members and $750,000 in its treasury. The era of con- 
solidations. Active stocks advanced to prices never before 
reached. New York Central sold at 192f . A movement to 
depress prices at the close of the month met with some 

success. The last rails of the Union Pacific and Central 

Pacific railroads were laid. Trains began running across the 
continent on the 15th. 

June, 1869. — Many brokers failed, the result of a success- 
ful bear attack on the market. 

July, 1869. — Heavy speculation in the Vanderbilt stocks. 
New York Central advanced to 217 J. Money was stringent. 

September, 1869. — New York Central dropped 25 points 

on the 22d, and a panicky feeling was developed. Gold 

reached 165 on Friday, the 24th — Black Friday. Transactions 
ran up into hundreds of millions, and business was conducted 
with so much confusion that bids running from 135 to 160 
were made at one and the same time in different parts of 
the room. Between 11 and 12 o'clock the shorts settled on 
a basis of 148@158, the market price being 5@15 higher. 
At noon it was officially announced that the Government 
would sell gold next day and buy bonds, and within 15 
minutes the price had fallen to 135, and the great specula- 
tion had collapsed. 

April, 1870. — The cliques who had bought stocks on the 
decline after Black Friday, started an upward movement in 
the last week of the month. The public came in and top 
figures were reached about May 10. The cliques unloaded 
turned bears, depressed prices until margins were wiped 



EFFECTS OF THE CHICAGO FIRE. 511 

out, bought in again at the decline and were ready for 
another advance. 

May, 1870. — The process of a shearing the lambs" was 
repeated in this month. 

June, 1870. — James Boyd, carrying 40,000 shares of stock 
and $5,000,000 gold, failed. The market showed signs of 
breaking, but was sustained by the cliques. 

July, 1870.— Congress authorized an addition of $54,000,- 
000 to the national currency. 

January, 1871. — A prominent operator repudiated his 
orders to buy Beading. Several brokers failed in conse- 
quence. The market was only slightly depressed. 

April, 1871. — There was much speculative excitement in 
the stock market. 

June, 1871. — Eock Island was cornered. The pool began 
buying at 114J and advanced it to 130£. On liquidation 
the stock declined to 110. Many failures occurred and bad 
faith was charged. 

October, 1871. — The week beginning October 9, 1871, was 
one of the most eventful in the history of the Stock Ex- 
change. The banks had expanded beyond precedent and 
were compelled to contract loans to raise money for crop 
purposes. The payment by France to Germany in settle- 
ment of war claims caused the Bank of England rate to 
advance from 3 to 5 per cent., and produced a feeling border- 
ing on panic in London. The New York market was very 
sensitive when news of the Chicago fire came. Prices 
broke 4@10 points. On Tuesday there was great excite- 
ment ; sales were enormous and fluctuations wide. On 
Wednesday there was a rally on the belief that the Govern- 
ment would purchase 5-20s. The lowest prices, however, 
were made on Thursday. On Friday there was more steadi- 



512 AN IMPORTANT SYNOPSIS. 

ness and prices were higher. The bank statement was 
favorable and matters quieted down. 

December, 1871. — The Ocean National Bank, the Union 
Square and the Eighth National Bank failed. Money was 
scarce, but stocks were firmly held. Operators and brokers 
were loaded up with stocks and they sustained prices, 
awaiting an opportunity to get out. 

March, 1872. — The Erie revolution occurred. The Board 
of Directors was overthrown, and Jay Gould resigned the 
presidency. Gen. Dix became his successor. The opera- 
tion caused great activity in the stock market, and money 
became tight. 

June, 1872. — Stock dividends on Lake Shore and Michi- 
gan Central were declared. 

August, 1872. — Gold was cliqued. 

September, 1872. — Erie was cornered. The Gould-Smith 
clique was short of it. The stock first became scarce on 
purchases by German brokers for foreign account. Then 
Drew became a heavy purchaser. At the same time the 
German brokers were long of gold, and with the double idea 
of punishing them and compelling those carrying Erie to sell 
out the Gould-Smith clique endeavored to lock up money. 
This plan was defeated by the refusal of two banks to pay 
out legal tenders on certified checks. Just then, too, the 
Government bought $5,000,000 bonds and sold the same 
amount of gold. This completely broke the speculative 
manipulation of money, and a panic was averted. During 
the height of the panic there were no quotations for money. 
Among the failures of the week were Northrup, Chick & 
Co., bankers, the Glenham Woolen Manufacturing Co., Pa- 
ton & Co., dry goods, George Bird, Grinnell & Co., stock bro. 
kers, Hoyt, Sprague & Co. and A. & W. Spragu. The banks 
suspended iheir weekly statements, and they were not re- 
sumed until late in November. 



PANIC OF 1878 fc -NUMEROUS FAILURES. 513 

November, 1872. — Jay Gould was arrested on criminal 
charges based on his management of the Erie Bailroad. He 
surrendered securities, the face value of which was more 
than $9,000,000, in December. Northwestern was cor- 
nered. It opened Nov. 20 at 83^ and closed at 95. On 
Thursday it sold at 100, and at the close on Friday 200 was 
bid. On Saturday buying in under the rule ran the price 
up to 230. The settlement was made on the following Tues- 
day, when the price declined to par, the highest bid made 
being 85. Jay Gould, Horace F. Clark and Augustus Schell 
conducted the corner, while the cornered were Drew and 
Henry N. Smith. It was one of the most profitable corners 
ever made in Wall street. 

February, 1873.— There was a noted corner in North- 
western. 

April, 1873. —The preliminary panic of the year occurred 
in this month. The stock market was uneasy. The failure 
of a firm of silk importers was followed by that of Barker & 
Allen, the members of which were related to Vanderbilt. 
Three other firms also failed. Confidence returned and 
quiet prevailed until the 26th, when the Atlantic Bank 
failed. This brought about another depression, which was 
followed by a quick rally. 

May, 1373.— Heavy break in Pacific Mail. The further 
retirement of greenbacks was prohibited by Congress. 

August, 1873. — Fraud was discovered in the issue of cer- 
tain bonds of the New York Central & Hudson Biver Kail- 
road. 

September, 1873.— The New York Warehouse & Security 
Company failed on the 8th ; Kenyon, Cox & Co., in which 
Daniel Drew was a special partner, on the 13th ; Jay Cooke 
& Co. on the 18th, and Fisk & Hatch on the 19th. Innu- 
merable brokers failed. There were runs on the Fourth 



514 AN IMPORTANT SYNOPSIS. 

National Bank and the Union Trust Company. The secre- 
tary of the company was a defaulter to the extent of $500,- 
000, and its doors were closed. The Bank of the Common- 
wealth failed. There was a panic in the stock market, 
and the excitement ran so high that the Governing Com- 
mittee closed the Exchange at 11 o'clock on Saturday, 
the 20th. The Gold Exchange Bank was unable to effect all 
the clearances, and dealers were unable to get their balances* 
The result was the temporary suspension of some dozen 
firms. The Gold Exchange Bank having been enjoined by 
the courts from making the clearances, the Bank of New 
York undertook the job and failed in it. Next a committee 
of 20 was appointed to do the work, but it failed also, be- 
cause Smith, Gould & Martin refused to render a state- 
ment to it. The final settlements were made between mem- 
bers themselves. Smith, Gould & Martin, with contracts 
amounting to $9,000,000, settled on a basis of 135. Busi- 
ness was resumed on Sept. 30. 

December, 1873. — The Credit Mobilier was organized for 
the construction of the Union Pacific Bailroad. It was com- 
posed of stockholders of the railway company, and had a 
capital of $3,750,000. Profits were large, and the stock was 
quoted at 400. Certain Congressmen were given stock at 
par on their personal notes, the object being to gain their 
favor in case adverse legislation was proposed. Oakes 
Ames, of Massachusetts, was expelled from the House for 
his connection with the bribery, and James Brooks, of New 
York, for accepting bribes. Other Congressmen were cen- 
sured. A proposition to impeach Vice-President Colfax was 
reported against by the Judiciary Committee. 

January \ 1874.— The value of the pound sterling was fixed 
by Congress at $4.86.65. 

February, 1874. — Two letters, purporting to come from 
the Wabash and Western Union companies, were received 



THE RESUMPTION ACT. 515 

by the Stock Exchange, announcing an increase of stock bj 
the directors. The market went off three points before it 
was discovered that the letters were forgeries. 

April, 1874.— The President's veto of the inflation bill 
unsettled prices and caused depression. The bears raided 
the market, causing a heavy decline, but a quick recovery 
followed. 

February, 1875. — Wabash went in the hands of a receiver. 

May, 1875. — A receiver for Erie was appointed. 

July, 1875. — Duncan, Sherman & Co. failed. 

August, 1875. — The Bank of California failed. Cashier 
Kalston committed suicide. 

March, 1876. — Jay Gould made his famous attack on 
Western Union. 

April, 1876.— The National Bank of the State of New York 
failed. 

November, 1876.— Many savings banks failed. 

January, 1877. — Commodore Yanderbilt died on the 4th. 

February, 1877. — Jersey Central went into the hands of a 
receiver. 

July, 1877. — Great railway strikes ; rioting and incendiar- 
ism in Baltimore and Pittsburgh ; losses $10,000,000. Over 
100,000 laboring men took part in the movement. 

January, 1878. — The Yanderbilt combination, including 
Michigan Central, Lake Shore and Canada Southern, was 
made in this month. 

February, 1878. — The purchase of silver bullion by the 
Government to the amount of $2,000,000 to $4,000,000 per 
month, and its coinage into legal tender dollars, was ordered 
by Congress on the 28th. 

May, 1878. — Congress passed the Resumption Act. 



§16 AN IMPORTANT SYNOPSIS. 

January, 1879. — Specie payments were resumed after the 
suspension which took place soon after the opening of the 
war of the rebellion. 

April, 1879. — Gould and Field combined, and under their 
auspices the St. Louis, Kansas City & Northern and Wabash 
Railways were consolidated. Gould already had control of 
Union Pacific and Kansas Pacific, and afterward secured 
control of Missouri Pacific and Denver & Rio Grande. 

Jane, 1879. — Western Union declared a scrip dividend of 
17 per cent. 

August, 1879. — There was a serious tumble in prices in 
this month. 

October, 1879. — The stock market was very active in 
October and November. The bull movement of the year 
was at its height and transactions were so numerous that it 
was impossible to record them all. The drop came in 
November. 

November, 1879.— William H. Vanderbilt sold 250,000 
shares of New York Central & Hudson River stock at 120 
to a syndicate headed by J. S. Morgan & Co., of London. 
Early in the following year the same syndicate took 100,- 

000 shares on the same terms. 

May, 1880. — Philadelphia & Reading Railway and Coal 
and Iron Company failed. There was a flurry in the stock 
market in consequence. 

June, 1880. — A scrip dividend of 100 per cent, to the hold- 
ers of Rock Island stock on the purchase and consolidation 
of the Iowa Southern and the Missouri Northern with Rock 

Island. A leading German Wall street banking house, in 

view of the large exports of gold, offered a premium of J of 

1 per cent, for a call on $1,000,000 gold, the privilege to 
extend for one year. 

November, 1880.— The Louisville & Nashville declared a 
100 per cent, stock dividend. Western Union declined from 



TELEGRAPH UNION. — GARFIELD SHOT. 517 

104J, on November 22d, to 77J on December 17th. Jay 

Gould purchased most of the stock of the Denver, South 
Park & Pacific Bailroad, in the following month a large 
block of Iron Mountain and a majority of the International 
& Great Northern. 

December, 1880.— -Seats in the New York Stock Exchange 
sold at 125,000. A great number of new securities were listed. 
So numerous were the combinations, consolidations and 
extensions of railways that in many cases the analogy with 
former periods was lost, and comparisons as to earnings 
were of little value. In 1886 seats in the Exchange sold at 
$35,000. In December, 1870, when speculation was stagnant 
and the market was clear of all outsiders, seats sold at 

$3,000. B. G. Arnold & Co., the largest coffee importing 

house of New York, suspended. They were the principals 
in a combination to corner Java coffee, and met disaster in 
the attempt. 

January, 1881. — Western Union, American Union and 
Atlantic & Pacific consolidated. The former company de- 
clared a stock dividend of 38J per cent. The capital stock 
was made $80,000,000. 

February, 1881. — Call loans were made at 1 per cent, per 
day on the 25th. 

May, 1881 —The Gould southwestern railway system was 
consolidated. 

July, 1881.— President Garfield was shot by Guiteau. 
The stock market broke on the news of the shooting, and a 
panic was only prevented by the intervention of Sunday 

and the National holiday on Monday. The Oregon war 

debt was paid. 

August, 1881. — There was heavy speculation in wheat and 
corn in Chicago and New York. Money became scarce, and 
call loans were made at interest and commission. 



518 AN IMPORTANT SYNOPSIS. 

September, 1881. — The Hannibal & St. Joseph corner. 

January, 1882. — The trunk line railway war of rates was 

settled. Gould and Huntington purchased a controlling 

interest in the St. Louis & San Francisco Railway and half 
the ownership of the Atlantic & Pacific Eailway. 

February, 1882. — The market showed some animation 
early in 1882, but it soon collapsed and became very weak 
Bottom was touched on the 23d, the recovery being based 
on talk of a settlement of the then existing trunk line rate 

war. Richmond & Danville plunged from 219 to 130 and 

a semi-panic ensued on the Stock Exchange. 

March, 1882. — To allay reports that he was in financial 
straits, Mr. Gould, on the 13th, displayed his wealth. He 
took from a tin box $23,000,000 Western Union, $12,000,000 
Missouri Pacific, $6,000,000 Manhattan Elevated, $2,000,000 
Wabash common, and $10,000,000 bonds of Metropolitan, 
New York Elevated and Wabash preferred. He offered to 
show $30,000,000 additional railway stocks, but his visitors 
had seen enough. 

October, 1882. — A syndicate headed by the late W. H. Van- 
bilt purchased 124,800 shares of the common and 140,500 
shares of the preferred stock of the New York, Chicago & 
St. Louis Railway at 13 and 37 respectively. This stock 
afterwards became the property of the Lake Shore & Mich- 
igan Southern Railway. 

December, 1882. — The Municipal Bank of Shopin, Russia, 

failed with liabilities of $60,000,000. The railway war 

in the Northwest lasted from September until December 
15. On the announcement of the settlement the market im- 
proved and the year closed with a better feeling all around. 

February, 1883. — Western Union absorbed Mutual Union 
by lease, the rental being interest at 6 per cent, on $5,000 5 - 
000 bonds and 6 per cent, on $2,500,000 stock. 



IMMENSE FLUCTUATION IN STOCKS. 519 

March, 1883. — A block of Hannibal & St. Joseph stock 
was sold to Chicago, Burlington & Quincy. At the same 

time Wabash was leased to Iron Mountain. From the 

19th until the close of the month there was great depression. 
Money on call loaned at 4@25 per cent. The public was 
heavily loaded with stocks. 

May, 1883. — Jersey Central was leased to Reading. 

June, 1883. — The National Petroleum Exchange and the 
New York Mining Stock Exchange consolidated. 
McGeoch, Everingham & Co., of Chicago, failed in conse- 
quence of an unsuccessful attempt to corner the lard market. 

The firm lost $6,000,000. The movement against the 

circulation of trade dollars at par was begun in Philadelphia 
and extended throughout the country. 

July, 1883. — Western Union Telegraph "operators struck 
for increased pay. The strike lasted a month and ended in 
failure. 

October, 18S3. — A notable feature of 1883 was the gigantic 
losses made in speculative operations. The failures of 
McGeoch, of Chicago, and Banger, of Liverpool, were 
notorious instances, but thousands of private individuals 

were squeezed out by the pressure. In the summer and 

fall of this year there had been a shrinkage in prices of 
stocks, when, in October, the Northern Pacific Company 
announced a proposed issue of $20,000,000 new bonds. This 
precipitated a heavy decline in nearly the whole list. The 
market became largely oversold, when a sharp twist was 
made in a number of stocks, and prices advanced with great 
rapidity. Northern Pacific preferred jumped from 56 to 78 J 
within a few days, and Oregon & Transcontinental went 
from 34J to 51. Then Vanderbilt came into the market and 
put up Michigan Central from 77 to 96£, and the other 
Vanderbilt stocks to a less extent. Great depression fol- 
lowed this manipulation. 



520 AN IMPORTANT SYNOPSIS. 

December, 1883. — The mercantile failures in 1883 amounted 

to $173,000,000, against $81,000,000 in 1881. The triple 

alliance between Union Pacific, Rock Island and St. Paul 

was made. Yillard resigned from Oregon & Transconti- 

nentaland Oregon Railway & Navigation. 

January, 1884. — Firmness in the market on the announce- 
ment that a syndicate had made a large loan to Oregon & 
Transcontinental on the pledge of its stocks. A quick move 

against the shorts caused a sharp advance. Henry Vil- 

lard resigned the presidency of the Northern Pacific Rail- 
road. John J. Cisco & Co., New York bankers, failed. 

The surplus reserve of the New York National banks was 
wiped out. James R. Keene, operator in wheat, failed. 

March, 1884. — There was a squeeze in New York Central. 

It sold up to 122. Delaware, Lackawanna & Western was 

cornered, and its price was run up to 133J regular and 1394 
cash. S. V. White managed the pool. Another move in 
the same stock was made later in the year. The pool closed 
out at an average of 102. Then the stock dropped to 86|. 

May 6, 1884— The Marine Bank failed May 6th, wrecked 
by Grant & Ward. Grant & Ward suspended two days 
later 

May, 1884. — During the panic the New York banks issued 
Clearing House certificates to the extent of $24,915,000, of 
which $7,000,000 went to the Metropolitan Bank. Similar 
certificates, to the amount of $26,565,000, were issued in the 

panic of 1873. The height of the panic was reached on 

the 14th. The storm had been brewing for nearly three 
years, but it was in no sense a commercial panic. Stock 
Exchange values had shrunk to an unparalleled degree, and 
the crash was precipitated by the developments regarding 
Grant & Ward, John C. Eno, Fish, of the Marine Bank, and 

a few others. The disturbance was over by July 1. 

The Metropolitan Bank failed. Eno's frauds on the Second 



PANIC IN 1881. — DEPRESSION RESUI/TS. 521 

National Bank discovered. George I. Seney failed. The 
Atlantic Bank failed. 

June, 1884. — The greatest depression following the May 
panic was reached. Large overselling led to a sharp rally. 

Charles Francis Adams, Jr., became president of the 

Union Pacific. 

August, 1884.— The Wall Street Bank failed. 

November, 1884.— The Metropolitan Bank, on May 15th 
had $11,294,000 in deposits ; on October 1st $1,333,000, and 
in November it went into liquidation and retired from busi- 
ness. 

December, 1884 — The Lackawanna pool of. 1884 closed 
out its holdings on the 12th, and there being no further 
support to the market prices declined, and the year closed 

with much depression. The largest corn crop ever grown 

in the United States was that of 1884. It was estimated at 
1,800,000,000 bushels. 

January, 1885. — Henry N. Smith, a noted bear operator, 
failed, and carried down with him the brokerage firm of 
William Heath & Co. 

November, 1885. — The trunk lines came to an agreement 
and advanced rates. This gave confidence, and an upward 
movement was started. The Yanderbilts and the Grangers 
were the features of the market. 

December, 1885. — Texas Pacific stock collapsed. A receiver 
was appointed for the property on the suit of the Missouri 

Pacific, a large holder of its floating debt. William H. 

Yanderbilt died suddenly on the 8th. The fact was not 
known down town until after business hours, but it had a 
very unsettling influence. The next morning the market 
opened 1@3 points lower, but the bulls had combined to 
support prices, and bought freely. In many instances 
prices were higher at the close than on the previous day. 



522 AN IMPORTANT SYNOPSIS. 

February, 1886. — The transcontinental pool was ruptured. 
The railroads declined to continue to pay the subsidy de- 
manded by Pacific Mail. 

March, 1886. — Western Union declared a scrip dividend 
of 1J per cent, for the quarter. The scrip was made con- 
vertible into stock, and carried the same rate of interest as 

the stock. The representatives of the coal companies 

met at a dinner party and reached " an agreement among 
gentlemen " that the anthracite coal production for the year 

should not exceed 33,250,000 tons. F. B. Gowen joined 

the Drexel-Morgan syndicate for the reorganization of 
Reading. The announcement caused a rapid advance in all 

coal stocks. The great strike on the Gould system of 

railroads, inaugurated on the 7th, failed. Heavy engage- 
ments of gold for shipment abroad were made. 

April, 1886. — Wabash, St. Louis & Pacific were sold in 

foreclosure. Labor strikes at their height. The Lake 

Shore switchmen struck in Chicago, and the Third Avenue 
horse car drivers in New York. The troubles had a de- 
pressing influence on the stock market. 

May, 1886. — Charles Woerishoffer, bear operator, died 

May 9. Chicago anarchists attacked the police with 

bombs, killing and wounding many. Police used revolvers 
freely and many rioters fell. Anarchists were sentenced 
to death. — -The strike on the Southwestern system was 
officially declared off on the 1st. The men were completely 

beaten after a contest of six weeks. Tasker Marvin, bull 

operator, failed. Marketing of long stock caused decline. 
The depression was aided by existing labor troubles. 

June, 1886. — Western Union passed its dividend. 

November, 1886. — The managers of the trunk lines re- 
affirmed the presidents' agreement of the previous year to 

maintain rates. Richmond & West Point Terminal became 

very active and strong on the purchase by the company of the 



THE INTER-STATE COMMERCE BIIJ,. 523 

control of Kichmond & Danville. There were extraordin- 
ary buoyancy and speculative activity in stocks. Low 
priced non-dividend payers were largely dealt in. One 
specialty after another was "boomed," and in some in- 
stances large profits were made. 

December, 1886.— About $10,740,000 in gold was imported 

at New York during the month. Prices toppled over on 

the 15th. All kinds of cheap stocks had been boomed by 
cliques, when, on money becoming tight, there was a rush 
to realize. Sales reached the unprecedented figure of 
1,095,159 shares. The most conspicuous stocks in the de- 
cline were Philadelphia & Eeading and New York & New 
England. No financial disaster or failure of importance 
occurred. There was much uneasiness for several days, but 
a better feeling soon set in, although speculation was 

checked by the prevailing high rate for money. The 

Inter-State Commerce bill was introduced in Congress. 

January, 1887. —On a report that Hocking Valley had suf- 
fered by irregularities of former directors, stock broke 1^ 
points. The consumption of iron in the United States ex- 
ceeded that of Great Britain for the first time in 1886. 
The Inter-State Commerce Bill was passed by the House 
Jan. 21, by a vote of 5 to 1. European war rumors caused 
foreign selling and a break in the market of 2 to 5 points. 
There was a complete recovery on the following day. 



CHAPTER XLVII. 

INTERNATIONAL SIGNIFICANCE OF THE BARTHOLDl 

STATUE. 

Great as an Achievement of Art, but Greater as the 
Embodiment of the Idea of Universal Freedom 
the World Over. — It is a Poetic Idea of a Univer- 
sal Eepublic— Enlightenment of the World Must 
Eesult in the Freedom of Man. 

THE following was sent by me to the New York World, as 
briefly embodying my views on Bartholdi's great work, 
a few days prior to the dedication of the Statue of Liberty : 

" When, several years ago, the gigantic forearm, with the 
torch in its hand, of the Statue of Liberty was exhib- 
ited in Madison square, the people who gazed at it with 
idle curiosity had little idea that the mammoth structure of 
which it; was a part would so soon be completed, or that it 
would be so great an achievement as it now stands. Thanks 
to the New York World, which gave the impetus to the sub- 
scription fund movement, which enabled the great sculptor 
to realize the greatest artistic dream of his life within a 
reasonable period. Some people may imagine that the 
time has been long, but many people who understood the 
magnitude of the work, and observed the slowness of the 
subscriptions, had no hope of seeing it finished in this 
generation prior to the time the subscription for the pedestal 
was under way. 

" Until the last few days, when this colossal goddess arose 
on Bedloe's Island in all her full, finished and magnificent 
proportions and artistic splendor, like the ancient divinity 
emerging from the foam of the sea, the people did not begin 
to realize the magnitude of Bartholdi's idea. In mere 
mechanical size the statue with its appurtenances excel 
anything and everything of the same character in the world. 



526 INTERNATIONAL SIGNIFICANCE OF BARTHOI.DI STATUE. 

It is the biggest thing of its kind either ancient or modern, 
and is, therefore, the most appropriate emblem to show forth 
the evolution and the international and historic associations 
of the two greatest Republics that the world has yet seen. 
The Colossus of Rhodes, the great Sphinx and other colossal 
statues sink into insignificance when compared with the 
latest production of Bartholdi's brain. 

" But great as the statue is as a work of art, the international 
idea which it embodies is greater still. When taken in con., 
nection with that earlier and comparatively insignificant 
effort of the same eminent artist, the Statue of Lafayette 
in Union square, the Colossus of Liberty suggests a whole 
century of history, replete with greater events than the 
thousand years which preceded it. In these two statues 
the interdependence of the two great nations is clearly 
portrayed, and their destiny as the pioneers of universal 
Eepublicanism brought out in bold relief. If Tennyson's 
poetic dream of a universal Republic is ever to be realized 
it will come through the idea which the chisel of Bartholdi 
has immortalized, and which the World has been chiefly 
instrumental in providing with a local habitation and a namje 
on Bedloe's Island. European monarchs are now trembling 
on their thrones, which are doomed to crumble into ruins at 
no distant day, through the very idea which ' The Statue of 
Liberty Enlightening the World ' is destined to propagate 
from this day forward in its imposing position in our spacious 
harbor. The Israelites of old were cured of their bodily 
maladies by gazing at a serpent erected on a pole. In a 
similar way the politically afflicted and oppressed of all 
nations, as soon as they emerge through the narrows of our 
magnificent bay, either by day or night, will find a panacea 
for all their ills in the sight of that wonderful statue, with 
all that its name implies. 

"And one word as to what is in that name which has been so 
severely criticised. On account of it Americans have been 
charged with egotism, but those who talk in this way seem 



BARTHOI^Dl'S INTERNATIONAL IDEA. 527 

to forget that Bartholdi himself, as the representative of the 
French n;ation, is the author of the name. So, as it comes 
from him in his representative capacity, we can receive it 
with good grace, and without being amenable to any such 
charge as that referred to. Taken, with all its broad, his- 
torical associations, I don't think the name is at all too pre- 
tentious. I have no hesitation in predicting that, ere the 
present century draws to a close, results will fully justify 
the assumption. 

"The magnificent gift of the French people, and the years 
of toil and study which Bartholdi has devoted, gratis, to 
his unprecedented labor of love, cannot fail of the great 
and only reward which both have so earnestly and mag- 
nanimously sought, namely — to enlighten the world." 



CHAPTER XLYIII 

LARGE FORTUNES AND THEIR DISPOSITION. 

how the foetunes of the astoes were made. — geoege 
Peabody and his Philantheopio Schemes. — Johns Hop- 
kins and his Peculiaeities.— A. T. Stewaet and his 
Aboetive Plans. — A Sculptob's Opinion of his Head. 
— Eccenteicities of Stephen Gieaed, and How he 
Teeated his Pooe Sistee. — His Penueious Habits 
and Geeat Donations. — James Lenox and the Li- 
beaey which he left.— how petee coopee made his 
foetune, and his llbeeal glfts to the cause of ed- 
UCATION.— Samuel J. Tilden's Munificent Bequests. 
—The Vandeebilt Clinic— Lick, Coecoean, Stevens 
and cathaeine wolf. 

I SHALL take a short review in this chapter of some of 
the most prominent wealthy men who have been the 
architects of their own fortunes, and comment briefly on 
their methods of disposing of their estates. 

In the United States, John Jacob Astor was one of the 
first to arrest public attention in the matter of large for- 
tunes. Before his day there were few, if any, millionaires 
on this side of the Atlantic. Now there are thousands of 
these lucky individuals. It is true, George Washington, 
the Father of our country, was very comfortably fixed, and 
supported aristocratic style in his domestic life, but he 
probably never was worth more, all told, than $200,000. It 
is singular that none of his successors have ever been worth 
even this amount. It was believed at one time that Grant 
had accumulated a large amount of money and value, and 
was fast approaching the financial status of a millionaire, 
but this popular delusion was suddenly dispelled when he 
and his family were victimized by the first young Napoleon 
of finance, Ferdinand Ward. 

The founder of the now wealthy house of Astor and of 
the Astor Library died in 1848, at the age of 85. He left 



530 LARGE FORTUNES AND THEIR DISPOSITION. 

the greater bulk of his estate to his son, William B. Astor. 
He bequeathed $400,000 to the Astor Library, also a few 
legacies, amounting in all, the library inclusive., to about 
$500,000. His wealth, at the time of his death, was esti- 
mated at twenty millions, a very large fortune at that time. 

William B. Astor, who died in 1875, left $250,000 to the 
library, and the large balance of his estate to his sons and 
widow. 

The Astors have been characteristic for their benefactions,, 
in a quiet way, to a large number of public objects 
Their estate is remarkable for the way it has been kept in- 
tact, and for its steady and considerably rapid improvement, 
and they are popular as landlords. 

The elder Astor who came to this country from Waldorf 
in Germany, near Heidelberg, before he was 20 years of 
age, and who started in life dealing in furs, had a grand 
scheme on foot at one time for monopolizing the fur trade 
of the whole world, which he had calculated would then 
have brought him a million dollars a year. He was diverted 
from this purpose by the large profits which he found in 
real estate, by dealing in which he made most of his money ; 
and the family has steadily adhered to this line of specula- 
tion and investment through two generations. 

The native American who, perhaps, ranks above all others 
in the munificence of his gifts, and the beneficence of his 
purpose was George Peabody. He was a poor Massachu- 
setts boy, who, by hard industry, arose to be one of the 
largest millionaires of his day. He was also a philan- 
thropist in the highest sense of the term. His fortune at 
one time probably exceeded ten millions. His well-known 
benefactions, during his life, exceeded seven million dollars, 
and it is supposed that he gave away vast amounts in charity 
of which no definite account was kept. 

Shortly before his death, in 1869, he bequeathed two and 
a half millions as a building fund for lodging houses for the 
poor of London, and devised foi a Southern Education Fund 



PKABODY, HOPKINS AND STEWART. 531 

two million one hundred thousand. In addition to these he 
left five millions to various relatives. J. S. Morgan, who 
was Mr. Peabody's partner in the banking business, became, 
at his death, his successor, and is now supposed to be a 
richer maa than Mr. Peabody ever was. 

Johns Hopkins, who died at Baltimore in 1873, at the age 
of 78, was one of the most eccentric millionaires and philan- 
thropists. Very few expected that he would bequeath the 
great university and the hospital which are called by his 
name. He was so wretchedly penurious that he hardly 
afforded himself the means of subsistence. His benefactions 
to these two institutions, however, exceed eight million 
dollars. 

Alexander T. Stewart, the great dry goods merchant, who 
was reputed to be one of the three wealthiest men in the 
United States, Commodore Yanderbilt and John Jacob 
Astor being the other two, died in 1876. He had no 
legitimate heirs, and his estate, estimated at one time be- 
tween twenty and thirty millions, was left to his wife, with 
the exception of a million to Judge Hilton and $325,000 to 
his employes. 

Mr. Stewart's two great benefactions were failures, as he 
left nobody able and willing to carry out his intentions in 
regard to their arrangement. 

They would probably have been failures in any event, as 
they seemed to the majority of people to be in a large 
measure Utopian. One was Garden City on Long Island, 
intended to be homes for industrious mechanics on a higher 
and more comfortable scalo than the majority of the dwell- 
ing of these sons of physical and intellectual toil. A grand 
cathedral was built there in memory of the merchant prince, 
and a beautiful crypt for his mortal remains, which were 
stolen from St. Mark's churchyard shortly after the inter- 
ment. 

The mechanics and laborers were not attracted to Garden 
City, and it is now making slow progress with tenants whose 
avocations are generally in the higher walks of life. 



532 I<ARGE FORTUNES AND THEIR DISPOSITION 

The other great enterprise was a home for girls and wo- 
men at moderate expense. This was in the shape of a hotel 
on a large scale at Park Avenue and Thirty- third street. The 
restrictions and the prices were such that the home also 
failed to attract the class it was intended for. The public 
gift, therefore, reverted to the Stewart estate, or gather was 
taken forcible pessession of by the trustees and transformed 
into the Park Avenue Hotel. To carry out the rather 
indefinite terms of the bequest would probably have involved 
the expenditure of a very large amount of the Stewart 
estate, and, perhaps, the enterprise would even then have 
been a failure. It is more than probable that if Mr. Stew- 
art had lived a few years longer, he himself would have 
been satisfied with the impracticability of both his semi- 
philanthropic schemes. 

There were great things expected in the shape of bene- 
factions from Mr. Stewart at the time of his death. He 
had done so little in that respect while living that the pub- 
lic indulged the hope that he would make up for his charit- 
able short-comings when he found that his worldly accumu- 
lations could no longer be of any service or gratification to 
him, and that he could not take any of them away with 
him. 

Hence, it was a considerable disappointment to the public 
when the will revealed the fact that nothing had been devised, 
out of the immense hoard of nearly half a century's savings, 
to charitable purposes. 

On the day of his death I had an engagement with my 
dentist, Mr. Dwinell, in Thirty-fourth street, and while I 
was seated in the chair Mr. Wilson MacDonald, the well 
known sculptor, came in to pay a visit to the dentist, with 
whom he was well acquainted. Having been introduced by 
the sculptor, we immediately entered into conversation on 
the prominent local topic of the day, the death of Mr. 
Stewart and the probable distribution of his wealth. 



A SCULPTOR'S OPINION OF STEWART'S HEAD. 533 

Mr. MacDonald invited me to go to his studio to see a 
bust in clay of Mr. Stewart that he had just about finished* 
He said, " I knew Mr. Stewart's aversion to having any por- 
traits or photographs taken of himself during his lifetime, 
so I provided for the emergency some time ago by taking 
close observation of him at various intervals. During the past 
two years I have frequently come in contact with him, going 
into his store and getting a good look at him from various 
points of view, so as to impress his likeness upon my mind. 
I have thus succeeded in getting a pretty good bust of him 
in clay." 

Mr. MacDonald was very anxious that I should call and 
see this bust, because, as I knew Mr. Stewart so well, he in. 
ferred that my judgment would be worth something, and he 
expressed a desire that I should criticise his work. I pro- 
mised him I would call and see the bust as soon as I could 
spare the time. 

On leaving the dentist's office I made another engagement 
to go back the following week, and in the meantime I had 
been unable to call at the studio of the artist, but the latter 
happened to be in the office of the dentist when I called 
there again. The will of Mr. Stewart had been published 
in the interim, and in it all reference to charities and benevo- 
lent institutions had been carefully omitted. 

Mr. MacDonald reminded me that I had not called to see 
the bust, and added, " If you had called that time you would 
hardly recognize any resemblance between what it is now 
and what it was then." " How is that ?" I inquired. " Be- 
cause," he replied (facetiously), " as soon as I saw the will 
published in the newspapers and none of that immense pile 
left to the public, from whom it had been collected, I set to 
work and toned down the bumps of benevolence, conscien- 
tiousness, sublimity, veneration and ideality, making those of 
acquisitiveness, inhabitiveness, amativeness and all the sel- 
fish and animal propensities prominent. I naturally con- 
cluded, if phrenology is not a fraud, that Stewart's will was 



534 LARGE FORTUNES AND THKIR DISPOSITION. 

a manifestation of the non-existence of the higher and more 
humane organs in his cranium. There certainly could be 
nothing there indicative of any generous emotions." 

I think everybody who knew the great dry goods merchant 
will be inclined to say that the judgment of the sculptor 
was neither rash nor uncharitable. 

Stephen Girard. 

Stephen Girard was another of the great millionaires who 
arose from penury, and whose eccentricity took a philan- 
throphic turn. Mr. Girard was a Frenchman, born near 
Bordeaux in 1750, who made his home in later years in 
Philadelphia. He bequeated over two million dollars to 
found and endow Girard College in that city. 

There is a good story told, which seems to be well authen- 
ticated, of the manner in which Mr. Girard rewarded the 
ingratitude of a sister. When he was a boy about ten he 
manifested very little disposition for hard work, and his 
family treated him harshly. One morning a rumpus arose 
about his idleness, and having said something that aroused 
the ire of his sister, she clutched the broom and flew at him 
in a rage. He retreated, receiving a few hard blows over 
the shoulders as he passed for the last time over the thres- 
hold of his paternal home. He went to sea, his father hav- 
ing been a seaman, and through various vicissitudes of for- 
tune eventually turned up as a millionaire in Philadelphia. 

After young Girard had gone through the preliminary 
course as cabin boy, trading between France, the West 
Indies and New York, he had saved up some money and 
became part owner of a small trading vessel. This was in 
1776, the year of the Declaration of Independence. His 
trading was suspended by the war with Great Britain. He 
then speculated in the renting of a number of stores in Phila- 
delphia, and sub-let them at a large profit. Afterward he 
purchased a controlling interest in the stock of the old U. 
S. Bank in 1812, and became a private banker with a capital 



SHE MEETS HER LONG LOST BROTHER. 535 

of more than a million. Subsequently he loaned five mil- 
lions to the Government to help defray war expenses. 

In the meantime fortune, however, had not favored his 
irate sister, who had chastised him with the broom. She 
remained poor. She had heard of her brother's wealth, 
however, but did not have money enough to pay her passage 
to this country. In this extremity she went to the captain 
of a Philadelphia vessel in a French port and told him that 
she was a sister of Stephen Girard, without money, and 
desired to go and see her brother, who was well known to 
the captain. She received the best accommodation that the 
vessel could afford. Having arrived in Philadelphia the 
gallant captain escorted her to the house of her wealthy 
brother. Leaving her in the hallway he went in to see Mr 
Girard and told him that a lady outside wished to see him. 
The benevolent captain was prepared to behold a demon- 
stration of joy, which he thought would be exhibited as soon 
as the long lost brother and sister should recognize each 
other. He was not kept long in suspense. Mr. Girard knew 
his sister instantly. " C'est vous." u It is you," he said. 
" Oui," she replied. These were all the words that passed. 
There was no rushing into each others arms, but on the con- 
trary, Mr. Girard plunged at the captain in a lively mood. 
"What authority had you to bring that woman here?" he 
said. The captain was dumbfounded and hardly knew what 
to answer. " Take her back again at your own expense," he 
added. 

The captain did not stand a minute on the order of his 
going, and the millionaire's sister, without receiving one 
kind adieu, was conducted from the palatial mansion of her 
brother to the vessel, and thence to her pauper home in 
France. 

This shows that the great philanthropist had a good 
memory and was resentful of injuries, yet it also betrays a 
narrowness from some taint of which the greatest minds are 
not entirely free. The Girard sister was unable to compre- 



536 I,ARG^ FORTUNES AND THEIR DISPOSITION. 

hend the higher aspirations of her young brother and his in- 
telligent convictions, which had, no doubt, taken form at that 
early period of his life, that a man can never become wealthy 
by hard manual labor. He was wrong, howevei, in giving 
her the cold shoulder. She was correct in one sense, from her 
point of view, although a narrow view, and his large charity 
should have condoned an error arising from her superficial 
conception of his early designs. 

His narrow-mindedness, with all his genuine greatness, and 
his eccentricity were exhibited in a remarkable degree in 
some of the restrictions of his will regarding the college. 
Although he was exceedingly generous in his gifts to religi- 
ous denominations, without distinction, as well as to chari- 
table institutions generally, he was, though illiterate, a free 
thinker of the school of Yoltaire and Rousseau. He, there- 
fore, had inserted in his will a prohibitory clause to the 
effect that no clergyman should be permitted to have any- 
thing to do with Girard College, nor even be admitted as a 
visitor. The college is for orphans between six and ten 
years of age, who are put to a trade when they are sixteen, 
all expenses being defrayed until they are able to earn a 
living. There are now over 500 beneficiaries. Girard died 
in 1831, at the ripe age of four score and one. He was 
worth nine million dollars, of which but a very small pit- 
tance went to a few of his relatives, the great bulk of the 
estate having been distributed among charitable institutions. 
This great philanthropist was exceedingly close in money 
matters with men generally, and it is said that he never had 
a friend, except the friend in the pocket, which is by all odds 
the most genuine. 

The late James Lenox takes rank with the great philan- 
thropists of the age, in attempting to devote a large portion 
of his surplus wealth to the good of humanity. When he 
died, in 1880, at the age of eighty, he was supposed to be 
one of the ^ve wealthiest men in New York. He spent a 
million dollars to found and endow the Presbyterian Hospi- 



JAMES LENOX AND HIS SELECT LIBRARY. 537 

tal at Seventieth street and Madison avenue, and over a half 
million in building the Lenox Library at Seventieth street 
and Fifth avenue. 

The building and the library are both immense gifts, but 
admission to the latter is so hampered by red tape, forms 
and ceremonies that it is of little or no earthly use to the 
general public. As a piece of architecture the building may, 
according to the ideas of the famous John Ruskin, help to 
educate the people / but in other respects they derive no 
benefit from it. The library, which is built on ten city lots, 
contains the choicest selection of books in the world, out- 
side of the British Museum, besides valuable manuscripts 
and works of art, and its collection of American works is 
unsurpassed anywhere. That part of the collection, consist - 
ing of Mr. Lenox's own private library of 15,000 volumes? 
contains books of rare value, many of which could not be 
duplicated. This is one reason why the general public are 
excluded. 

In fact, there is a good deal to be said in favor of the 
fastidious care that is taken of some libraries and picture 
galleries, as a large portion of the general public don't know 
how to appreciate their privileges, and therefore abuse them, 
some through the relic monomania and others actuated by 
pure mischief. Thus it was that Mr. William H. Vanderbilt 
was very reluctantly obliged to exclude the general public 
from his fine picture gallery, as certain visitors scratched the 
etchings with their canes and put their fingers on the pic. 
tures, while others were incessantly on the relic hunt and 
had to be carefully watched during their visit. 

Peter Coopee. 

Peter Cooper was another of the philanthropists, with 
large means, who sought to distribute a considerable part of 
it where it would do the most good to humanity, especially 
to that portion of it who are in pursuit of knowledge under 
di'tficulties, Mr. Cooper had a hard time of it himself getting 



538 LARGE FORTUNES AND THEI^. DISPOSITION. 

a fair education, and he knew how to appreciate the boon. 
He was born in New York in 1791, and at the age of seven- 
teen was apprenticed to a coachmaker. He tried his hand 
at several other occupations, was an inventor by nature, and 
the designer and builder of the first locomotive in this coun- 
try, which had its trial trip on a part of the Baltimore & 
Ohio Railroad. 

Mr. Cooper experienced his great success in fortune build- 
ing in the manufacture of glue. He afterwards erected ex- 
tensive iron works at Baltimore, Maryland, and subsequently 
in Trenton, New Jersey. During his life he built the Cooper 
Institute, at a cost of $650,000, with a subsequent donation 
of $150,000. This institution is devoted to the instruction and 
elevation of the working classes. It consists of a large 
reading room and library and a public lecture hall. The 
building occupies a small block at the junction of Third and 
Fourth avenues and Eighth street. It has evening schools, 
attended by 2,000 pupils ; a school of design for females, in 
which there are 200 ; also, a school of telegraphy for women, 
7 rom which, in two years, over 300 operators have been sent 
out. 

The rents from the building on the lower floor and the 
offices defray the greater portion of the expenses. Ample 
provision was made in Mr. Cooper's will for the permanence 
of the institution. During his life he was a general donor to 
all kinds of charitable institutions, and almost every variety 
of labor organization. He ran for President in 1876 on the 
Greenback and Labor ticket, and was defeated by an over- 
whelming majority.' He had an idea that a large issue of 
greenbacks would create universal prosperity and make 
everybody happy. He died in 1883, at the age of ninety - 
two, leaving five or six million dollars, the greater portion 
of which fell to his son and daughter, the latter being the 
wife of Mayor Hewitt. 

One of the greatest of American philanthropists, espe- 
cially as his princely bequest was rather unexpected, was 



SAMUEL J. TILDEN AND OTHKR PHILANTHROPISTS. 539 

the Hon. Samuel Jones Tilden, whose financial and political 
career I have referred to in another chapter. He was about 
seventy-three years of age at the time of his death, in 
August, 1886. 

Mr. Tilden died worth about five millions, four of which 
he left to be donated to public and beneficent objects. The 
greater part of this is to be spent in the erection and endow- 
ment of a grand free library, which, if the terms of the 
bequest are properly administered, will be the greatest in- 
stitution of its kind in this country. 

The disposition of the Vanderbilt fortune, up to the pres- 
ent time, has been briefly described in the lives of the 
various members of the family in another chapter. The 
Clinic of the College of Physicians, however, which has 
recently been opened at Sixtieth street and Fourth avenue, 
is entitled to greater detail, as it is, perhaps, destined at 
some future day to become a great medical centre. Mrs- W. 
D. Sloane, daughter of Wm. H. Vanderbilt, subscribed $250,- 
000 to build the Maternity Hospital, in connection with this 
institution, her father having, prior to that, donated the bal- 
ance of the million necessary to finish the entire structure, 
which consists of the Clinic, the Maternity Hospital and the 
College Hospital. It is said that in all their appointments 
the different departments of this institution are superior to 
anything of a similar description in the world. 

Among the men who disposed of great fortunes I may 
mention James Lick, of California, who devoted millions to 
charitable purposes ; William W. Corcoran of Washington, 
who gave two millions for an art gallery and a home for old, 
decrepit and superannuated women ; also, Mr. Stevens, of 
Hoboken, who devised two millions, one for the Stevens 
Battery and the other for the Stevens Institute at Hoboken 
Miss Catharine Wolf, who died last year worth twelve 
millions, bequeathed largely of her estate to charitable pur- 
poses, and donated her magnificent art gallery to the Metro- 
politan Museum of Art. 



540 I<ARGE FORTUNES AND THEIR DISPOSITION. 

"What a lesson is taught in these examples of philan* 
tnropic celebrities to our fellow-beings — I was going to say 
fellow citizens, but that would not be appropriate in many 
instances — the Socialists. Those millionaires, who have all 
more or less been denounced as hard-hearted monopolists, 
have been among the hardest workers and thinkers all their 
lives, many of them denying themselves the luxuries and 
some of them even the full necessities of life. For what 
purpose? Simply to be the hard worked and poorly fed 
mediums of accumulating wealth to relieve the necessities 
and minister to the comfort of the less fortunate, the idle, 
the dissipated, the poor and the needy, and in general those 
who misunderstood and abused them on account of their 
good work. 

It was good for those benefactors of humanity that virtue 
is its own reward. 



CHAPTER XLIX. 
SOUTHERN AFFAIRS IN SPECULATION. 

The Preservation of the Union a Geeat Blessing. — To 
Let them "Seoesh" would have been National 
Suicide. — How Immigration has Assisted National 
Prosperity. — Kescued from the Dynastic Oppres- 
sion of European Governments. — Showing Good 
Fellowship towards the Southern People and Aid- 
ing them in their Internal Improvements.— The 
South, Immediately After the War, had Greater 
Advantages than the North for Making Material 
Progress. — The Business of the North was In- 
flated. — The States of Georgia and Alabama Of- 
fered Inviting Fields for Investment. — Issuing 
State Securities, Cheating and Eepudiating. — Pres- 
ident Johnson Chiefly to Blame for the Breach 
of Faith with Investors who were Swindled out 
of their Money.— Revenge and Avarice Unite in 
Financial Repudiation. 

DURING the war I did all that lay in my humble power 
to further the cause of the Union, believing that it was 
a righteous one, and that the North went into the struggle 
to maintain, uphold and preserve the best form of govern- 
ment known to man, and certainly the only one suitable to 
America. 

View it as we may, the wisdom of man has yet evolved 
nothing to surpass the Constitution of the United States. 
Whether Thomas Jefferson or Thomas Paine was the author 
of its leading features, is a matter that I shall not stop to 
discuss, but suffice it to say, that upon it has been estab- 
lished the best government in the world. There is no other 
system in ancient or modern history that could weld to- 
gether and bring into the social and political affinity of one 
great integral harmony the immense variety and diversity of 
human elements that are dwelling as one large and compar- 
atively happy family in the United States. 



542 SOUTHERN AFFAIRS IN SPECULATION. 

What other system could combine so many nationalities, 
creeds, passions and prejudices, modifying all of them and 
uniting all for the general good and the perfection of a 
higher development of human nature in political and social 
life ? 

There is none. We must go to the pleasanter pages of 
political fiction to find a comparison. 

This country has made greater strides in each decade 
towards the possible approach of More's Utopia or Plato's 
Republic than any other country has done in the same num- 
ber of centuries. 

It must be admitted that we are a considerable distance 
from the happy goal contemplated by the writers named, 
but we are moving in the direction to show that its attain- 
ment is possible. We shall yet accomplish what the world 
has hitherto considered a pleasant fiction overworked through 
the highest ideal of Greek art. 

This high state of development is what we are coming to 
in spite of the fact that the average ward politician has im- 
mense chasms to cross before the hill tops of his evolution 
shall appear in sight. When he begins to climb, however, 
his ascent will be marvellously rapid and he will leave that 
vehement youth of Longfellow's, whose watchword was Ex- 
celsior, far in the distance. Moreover, his steps will be 
steady and prudent, and not liable to unfortunate reaction 
or fatal mishap. 

It has been said that revolutions never go backward. With 
much stronger emphasis it may be asserted that evolutions 
in a Eepublic like those I am now contemplating never re- 
cede, but still press forward and upward towards the mark 
of a higher ideal. 

A large proportion of the people who come here do so for 
the chief purpose of getting away from other forms of gov- 
ernment that are despotic in their rule and oppressive to 
their subjects. 

These people who come to us are saved and redeemed 



GOOD RESULTS OF IMMIGRATION. 543 

Their lives would have been wasted if they had remained 
in the land of their birth. In this country, they not 
only add to the wealth of the nation, but they become use- 
ful members of the social fabric, with few exceptions, enjoy- 
ing happiness themselves and bringing up children, whom 
they teach to admire, honor and revere the institutions of 
this country in contrast with the land of their own nativity. 

This country has thus become the asylum for the down- 
trodden of every nation, and it is a great gainer by the con- 
trast thus constantly presented to the minds of those who 
come here. Our own people are also in this way taught to 
appreciate their privileges and set a higher value upon the 
advantages they enjoy. 

If it were not for the constant stream of immigration to 
these shores, the people of this country might begin to think 
that Republicanism was the birthright of all, and forget that 
they enjoyed especial privileges by birth, and came into 
this world with a very important start of other nations. I 
fear that some of them are prone to imagine, especially some 
of the fair sex, that we suffer here from that long felt want 
of a hereditary and native nobility. Some of these fair ones 
have had sad experience, that should have disabused their 
young minds of these notions not very long ago. The force 
of these examples will have some effect, at least, in mod- 
erating the folly of their mothers. It can hardly be expect- 
ed that many of the young ladies will learn much them- 
selves, except by a repetition of the same sad experience, 
but the persuasive powers of the mammas may exercise a 
deterring effect in many instances where hasty matrimonial 
alliances to catch the bauble of a foreign title would be the 
forerunner of much misery and sometimes shame. 

I might cite many instances of these from our own city, 
but the sensational papers will deal with them ad nauseam. 
I don't aspire to be sensational in this book. I only attempt 
to state in matters of this kind what may suffice to point the 
moral, leaving the sensational story-teller to adorn the tale 



544 SOUTHERN AFFAIRS IN SPECULATION. 

Nor do I mean to cast any reflection on such happy mar. 
riages as that of Miss Jerome to Lord Randolph Churchill, 
and others I could mention. 

Our expansive territory has enabled the adventurous and 
energetic of all nations of the world to come here and make 
homes for themselves, instead of remaining in the land of 
their birth, where many of them were existing in a modified 
condition of slavery under other names. 

The idea of encouraging this large exodus from other 
lands, and this freedom of assimilation with our people, has 
been one of the great bulwarks of our prosperity. 

I realized this fact very clearly at the commencement 
of the war of the Rebellion, and have cherished it ever 
since. 

I therefore felt deeply earnest in my sympathy with the 
North against the South, whose great effort was to break up 
the present form of government, attempting to destroy its 
autonomy and powerful cohesiveness. 

The nation would have been split in twain to start with, 
if Horace Greeley's advice had been taken, "Let them 
secesh." Mr. Greeley's counsel was well meant, as he 
thought the Southern people would soon be glad to return 
to the Union, but it would have been national suicide to 
follow it. 

" The two parts of the dissevered nation would have been 
constantly menacing each other, and kept on a war footing, 
with occasionally recurring hostilities across the border on 
every slight provocation. The result would have been that 
some or ail of the European powers would have taken ad- 
vantage of this state of affairs to plant the standard of des- 
potism once more on these shores, making this fair land a 
battle ground for Imperial and kingly ambition. 

These designs were foreshadowed by Napoleon III., whose 
actions I have dealt with more fully in another place, and 
Great Britain was only awaiting the opportunity *o avenge 
Bunker Hill. Saratoga and Yorktown. 



ESCAPED FROM DYNASTIC OPPRESSION. 545 

In fact, all the powers of Europe would have taken ad- 
vantage of the chance of acquiring a slice of such a fine do- 
main, where in the event of successful secession only feeble 
resistance could have been offered to foreign aggression. 

In the event of a decisive victory for the Confederate 
arms, faction fights would have always been springing up, 
and the tendency would still have been increasing to create 
a greater number of separate and independent governments. 

Napoleon had been looking at matters in this probable 
light, when he resolved to make Mexico a backdoor, with 
Maximillian as its keeper, to enable him to gain an entrance 
to this country when a favorable opportunity for the com- 
pletion of his purposes should arise. 

Having myself been born in a foreign land, wi*ere I passed 
my boyhood's days, I have a vivid recollection of the work- 
ings of the harsh system of a European government, although 
by the accident of birth I was placed in circumstances where 
the pressure on myself was not very galling. 

I saw enough, however, to make a durable impression on 
my mind, to arouse my sympathies for others and to excite 
my lasting indignation against dynastic oppression. 

I lost no opportunity during the dark days of the rebel- 
lion in this country, to be outspoken in favor of the cause 
which I had espoused from a firm conviction that it was 
right. I did all I could to help to promote ways and 
means for aiding the North in carrying on the war. I went 
into the contest with my whole heart, and gave my entire 
and undivided attention to the sale of Government securi- 
ties to raise the sinews of war. 

In this way, I believe, I rendered more valuable assist- 
ance to the cause than if I had been performing deeds of 
valor amid the roar of cannon and the rattle of musketry. 

I became pronounced in my opinions and made myself 
active in organizing meetings to celebrate every victory of 
the Union army, thus inspiring the men in the field and the 
recruits on their way thither, and sustaining the hearts of 



646 SOUTHERN AFFAIRS IN SPECULATION. 

our business men to place implicit confidence in the future 
triumph of the nation. 

It required more courage than many people now imagine 
to take this stand at that time, for opinion was largely divi- 
ded in this city on the prospects of the issue, and a strong 
, sentiment in favor of the enemy threatened at one time to 
become predominant. 

Many people were eyed with very strong suspicion during 
the greater part of the struggle in regard to their loyalty, 
who had followed the course of extreme prudence in keeping 
their counsel, being doubtful of the result. I took the ground 
that citizenship would not be worth much in the event of 
final disaster to the Union cause. I was also of the opinion, 
when the war was ended to the glory of the country and the 
maintenance of the Government on a substantial basis, that 
the time had come to bury the hatchet. 

I believed not only in bringing back the South under the 
old flag, but also in extending the right hand of fellowship 
to the people, who, whatever may have been their faults, had 
been terribly punished. 

I believed that no good could come out of a policy that 
persisted in trampling upon a fallen foe, especially as that 
foe had, after all, only been an erring brother, and could be 
brought back again into the family fold to share its mutual 
sympathy and material prosperity. 

I felt, therefore, that I could afford to be prominent in a 
movement that had this great and harmonious end in view, 
the more especially as my loyalty had never been questioned 
in the hour of our greatest peril. 

I not only extended the right hand of fellowship to 
Southern men, but gave aid and comfort to them wherever 
they appeared in our midst. 

My office, therefore, after having been the headquarters 
of loyal Northern men, and for every project in the interest 
of the Union cause, became notorious as the rendezvous of 
Southern generals and Southern people generally, almost aa 
soon as the war was over. 



BEAUB.EGARD S S VISIT TO NEW YORK. 



547 



General Beauregard was one of the prominent leaders of 
the Confederacy to whom I exercised the liberty of extend- 
ing hospitalities on his first visit here. I relaxed no effort 
to make his visit agreeable, and show him the sights around 
the city. I recollect escorting him as my guest to the Gold 
Eoom, which was then quite an institution in "Wall Street. 
At this time gold was selling at a premium of about 50. 

On our entrance to the Eoom it was at once whispered 
around that my distinguished guest was General Beaure- 
gard. The President of the Board was at that time out- 
spoken and bitter in his opinions against everything 
Southern, and had not the good sense and common man- 
ners to conceal his animus on this occasion. Others took 
a similar attitude, and the feeling manifested became as bel- 
ligerent as if the war had been actually raging. 

This exhibition of bad blood and bad manners was v^ry 
distasteful to me. I was a member of this Exchange, and I 
thought I knew my rights, and I was disposed to maintain 
them. I regarded the insult to Beauregard as offered to 
myself, and was prepared to resent it accordingly. He was 
my guest, and I had determined to stand by him at all 
hazards. I informed those who were foremost in manifest- 
ing these unworthy feelings of resentment that I should pro- 
tect my friend no matter what course they should take, as 
long as he desired to remain in the room. This had some 
effect in smoothing down the asperities of the most hostile, 
and we were permitted to depart in peace. I escorted 
General Beauregard afterwards to the New York Stock 
Exchange, where he was kindly received, and without a 
murmur of feeling. I introduced him to many of the mem- 
bers individually, who she ok hands with him and inter- 
changed civilities in the warmest manner, giving him a 
hearty welcome to our city. Beauregard was delighted with 
this reception at the Stock Exchange, but was greatly 
chagrined at the conduct of the people in the Gold Boom. 

After this, many other Southern notabilities from time to 



5-A3 SOUTHERN AFFAIRS IN SPECULATION. 

time came to the Street, and received at my hands similar 
treatment. Among others, Gener aJ -"EV^^ of Fort Pillow 
carnage notoriety, paid me a visit. ^Jt\ ^~ 

I could relate a great many other instances, if time and 
space would permit, showing very explicitly the efforts I 
have made to help along harmony and reconstruction. I 
was anxious, in the interest of general prosperity, to assist 
the South to recover from the dreadful blow inflicted upon 
her by a fratricidal war as soon as possible. 

So, as the work of reconstruction progressed, I became 
interested in the internal improvements of that section of 
our country, as my subsequent investments there will fully 
attest. I thought that the South had experienced fighting 
enough, as the North had, and that the people of that 
section would gratefully accept the terms in the main 
agreed upon under the appletree at Appomattox, between 
General Grant and General Lee. I had hoped that the peace 
would be such as to conserve all the interests of the coun- 
try, including every man, from the boldest and bravest Con- 
federate general down to the lowest of the negro race, with- 
out any invidious distinction. I had the hopeful impression 
that all would go to work and do all in their power to till 
the soil, or do anything elso that would add to the material 
wealth of the country and the individual happiness of its 
recreated citizens ; that they would apply themselves to 
every form of industry that would help in any degree to a 
recovery from the disasters growing out of the war, and 
the lamentable destruction of property attending it. 

The South immediately after the war had greater advan- 
tages than most people imagine, if it had only taken hold 
of them in the right spirit. It had various sources of pros- 
perity, which under prudent management would have ena- 
bled it to leave the North far behind in the race for 
wealth. Its leading staples, cotton, tobacco, and rice, had 
all a gold value in tho markets of the world. 

This opportunity of going in to produce at hard-pan prices 



SPECULATIVE ADVANTAGES OF THE SOUTH. 5-49J 

on a gold basis invested it with an immense leverage against 
the North, with its inflated currency and war prices, growing 
out of the large issue of paper money necessary to carry on 
the war, and consequent over- speculation as a natural result 
or sequence. 

It seemed to me, then, that, while the South had a grand 
opening for growth in prosperity on a solid basis to begin 
with, the business of the North was, in comparison, in an in- 
flated position, that must burst before it could get a fair start 
on a solid foundation. It appeared as if it would sooner or 
later suffer a temporary collapse, while the South had only 
to begin and build without fear of any such interruption. 

I, therefore, selected for my investments as the best fields 
in the South the two States that stood the highest in their 
financial credit, in their character for integrity and enter- 
prise, and that then had the brightest outlook, namely 
Georgia and Alabama. 

These States took my money freely, issued their State 
securities, their County securities, sold me their bonds, and 
got me thoroughly interested, and that to a very large ex- 
tent, and then treated me with the basest ingratitude, repu- 
diating their bonds, and cheating me out of my money and 
property in every way conceivable. 

I attribute the cause of this unjust treatment, however, to 
Andrew J ohnson, who, by accident, through the assassination 
of President Abraham Lincoln, became President of the 
United States. 

Mr. Johnson was a Tennesseean, loyal during the war to 
all appearances, and for all practical purposes of the Union 
cause, and he would doubtless have so remained had it not 
been for the unfortunate circumstance of Abraham Lincoln's 
death. 

This made him Executive of the nation, for which by 
ability he was amply fit and qualified, but through bias and 
temperament, entirely unfit to fill creditably this eminent 
position for the best interests of the country at large. 



650 SOUTHERN AFFAIRS IN SPECULATION. 

The position I took, as above stated, was, that since the 
war was over, it was a thing to be forgotten as speedily as 
possible. The finality was seriously delayed owing to the 
hostility that President Johnson did his best to excite and 
prolong amongst the people of the South. 

Congress, it will be remembered, was leniently disposed 
in the passing of measures and framing of laws to bring the 
traitorous States of the South back again into the Union. 
The members of Congress most cautiously and delicately 
worked to patch up old sores that were supposed to exist 
between the victors and the vanquished, but when their bills 
went to the President they were unmercifully subjected to a 
wholesale process of vetoing, almost indiscriminately. This 
produced a condition of chronic hostility between the legis- 
lative and executive branches of the Government, and the 
wider the breach became the stronger and more vindictive 
grew the spirit which it naturally aroused in the Southern 
people. 

These people were sadly misled by the President, whom 
they trusted, and his hobbies were humored at the expense 
of their prosperity. 

Johnson made the people of the South believe that his 
vetoes would only delay legislation until Congress should be 
forced to find them something better. They, accordingly, 
reposed faith in him, and were badly deceived. 

The feeling of animosity excited by this condition of 
things so worked on the minds of the people, causing the 
South to wax bitter and revengeful, that it appeared to 
people on this side of Mason and Dixon's line that their 
Southern brethren had become even more implacable than 
during the hottest scenes of the war. 

It was for the reasons above stated that bonds which had 
been issued by the South for money invested by the North 
were, in a large measure, repudiated. As soon as it was 
discovered that most of the vested interests were owned by 
Northern people, the spirit of revenge and avarice combined 



BAMBOOZLED BY POLITICIANS. 551 

was aroused to the point of repudiation. And, unlike the 
courage of Macbeth, it did not require any stimulant to 
make that the sticking point. Every method that ingenuity 
could devise to strike a blow at the North was employed. 
No opportunity was allowed to slip that afforded any ad- 
vantage, either material or moral. 

Thus, instead of accepting the situation as General Lee 
had done, they were led astray by every one who had a 
political axe to grind. They took an active part in politics 
instead of looking after the various industries of the country 
and developing its resources. They engaged in political 
discussions and their attendant broils, to the neglect of 
necessary enterprises that would have brought them material 
prosperity. 

Thus they became poorer and poorer. Many years were 
lost in these political turmoils, and the people became more 
and more embarrassed. 

From these circumstances there were many financial 
victims, but few, if any, suffered more in that respect than 
myself. 

I had over two and a half millions of dollars invested in 
the State of Georgia securities, and in other ways, a million 
more at least in Alabama and North Carolina together, all 
of which was perfectly annihilated, the entire disastrous 
result growing out of the factious spirit that was created 
and fostered by the vile and narrow prejudices of President 
Andrew Johnson, of whom I have still more to say in another 
chapter. -" 



CHAPTEE L. 

WESTERN AND SOUTHERN FINANCIAL LEADERS. 

Alfred Sully, his Origin and Successful Career.— Cal- 
vin S. Brice, a Financier of Ability. — General Sam- 
uel Thomas, Prominent in the Southern Kailroad 
System. — General Thomas M. Logan, a Successful 
Man in Railroading and Mining.— Financial Chief- 
tains of Baltimore.— The Garretts— Their Great 
Success as Kailroad Managers. — Portrait of Eobert 
Garrett. 

ALFBED SULLY, who has become so prominent in the 
financial world within a year, is tall, rather slightly 
built, nervous, and energetic. His face, by its long, square 
contour and thoughtful lines, suggests that of Senator Wm. 
M. Evarts ; the eyes are keen and penetrating but kindly. 
At heart his tastes are those of a genial literary recluse. 
Circumstances and unquestioned ability have made him a 
financial leader. He was born about 46 years ago in 
Ottawa, Canada, where he received a good academical edu- 
cation. He tried his fortune in the West. He went to Cin- 
cinnati, studied law, and was graduated from one of its best 
schools, whereupon he went to Davenport, Iowa, and formed 
a copartnership which became known as the leading law 
firm of the city. He acquired some means, and in 1872 
came to New York, the proper place for men of ability. It 
is understood that at this time he had some idea of indulg- 
ing his tastes for authorship, but Austin Corbin put a veto 
on that. The two had become acquainted in Davenport, 
where Mr. Corbin was formerly a banker, and the latter, on 
meeting Mr. Sully in New York, tendered him the position 
of General Manager of the Corbin Banking Company, 
which he had established here. He accepted it. But this 
post, responsible as it was, could not long hold a born finan- 
cier, and we soon find him obtaining control of the Indiana, 



554 WESTERN AND SOUTHERN FINANCIAL LEADERS. 

Bloomington & Western Koad. He next bought the Ohio 
Southern, of which he is still President, a transaction in 
which he and his friend nearly doubled their money. Then 
he made a great deal of money in the Central Iowa and 
other roads in Illinois. He and Austin Corbin secured con- 
trol of the Long Island Boad, and he gave much time and 
labor to the Manhattan Beach Boad and associated inter- 
ests at Coney Island. Then he went into the scheme of 
restoring the financial health of that enfeebled giant among 
railroads, the Beading, and was one of the prime movers in 
the reorganizing and consolidation of the Bichmond Ter- 
minal, the Bichmond & Danville, the East Tennessee, Vir- 
ginia & Georgia, and numerous other Southern roads, which 
now form one vast system, which will probably yet obtain 
an entrance into New York. 

Calvin S. Bbice. 

Calvin S. Brice was Yice-President of the East Tennessee, 
Virginia & Georgia Boad, and is a Director in the Bich- 
mond Terminal and numerous other Southern roads. He 
is now connected with the United States Express Company, 
in the management of which he will take an active part. He 
was born in Lima, Ohio, about 48 years ago, and was edu- 
cated as a lawyer. He is below the medium height, and 
rather slightly built, but has broad shoulders, a fitting 
pedestal for a good head, with firm square features and keen 
bluish gray eyes. He wears a sandy beard, closely trimmed, 
which tends to heighten the effect of decision of character. 
He is a financier of ability. 

Gen. Samuel Thomas. 

General Samuel Thomas, who is prominent in the South- 
ern railroad system, is now about 50 years of age, is a 
Western man, and before the war was a civil engineer in 
the service of an Ohio railroad. After the war he again 
became a civil engineer, but, drifting after a time to New 



FINANCIAL CHIEFTAINS OF BAI/flMORE. 555 

York, engaged in railroad enterprises, and ultimately se- 
cured a large interest in Southern railroads. He is now 
President of the East Tennessee, Virginia & Georgia, and 
is largely interested in the Eichmond & West Point Termi- 
nal, the Eichmond & Danville, the Memphis & Charleston, 
and other Southern roads. He is tall, well-built, energetic, 
and affable. He lives in fine style, and is a member of the 
Union League. He is worth several millions. 

Gen. Thomas M. Logan is President of the Virginia Mid- 
land Eailroad, Vice-President of the Eichmond & Danville 
and Eichmond Terminal, and a Director in all the roads in 
this system. He was born in Charleston, S. C, about 44 
years ago. He served with distinction in the Confederate 
Army, and rose to be a Brigadier-General, being one of the 
youngest in the service. He is a graduate of the Univer- 
sity of South Carolina, and formerly practiced law in Eich- 
mond, Virginia, where he is also engaged in extensive man- 
ufacturing and mining enterprises. He resides in Eich- 
mond, and is a member of the Westmoreland Club, but often 
comes to New York on railroad business, in which he has 
amassed a comfortable fortune. 

John W. Garrett's name will always be associated with 
that great property, the Baltimore & Ohio, which he rescued 
from the verge of bankruptcy. He was a man of great force 
of character, and inherited an aptitude for business. He 
was a graduate of Layfayette College in Pennsylvania, and 
engaged in business in Baltimore. He became a Director 
of the Baltimore & Ohio Eailroad, and in 1858 was elected 
its President. He was a staunch supporter of the Union in 
the civil war. Despite a disloyal sentiment plainly notice- 
able in Baltimore and elsewhere in Maryland, he lent the 
Government all the assistance in his power in the transporta- 
tion of hundreds of thousands of Federal soldiers. He was 
quick to repair burned bridges, and to do anything to facilitate 
the military operations of the Federal Government. Presi- 
dent Lincoln and Secretary Stanton thanked him warmly. 



556 WESTERN AND SOUTHERN FINANCIAL LEADERS. 

His salary as President was $10,000 a year. The Directors 
repeatedly offered to increase the remuneration, but lie de- 
clined to accept it. He often refused offers as high as 
$50,000 a year to become the President of other roads. He 
was autocratic in his administration. His will was law. He 
found the Baltimore & Ohio Railroad a weak and struggling 
underline in the railroad world, and he left it a giant in the 
American system of railroad transportation. 

Eobert Garrett, the son of the preceding, and now the 
President of the Baltimore & Ohio Eoad, is one of the rail- 
road kings of the United States. He became the President 
of the Baltimore & Ohio in his thirty-seventh year, after 
having served as Third Vice-President and First Vice- 
President under his father's administration. He is a grad- 
uate of Princeton, a man of genial characteristics, and a 
favorite in society. He has made a study of railroad ad- 
ministration, but is now understood to seek some relief 
from the burdens unavoidably incident to his position as 
the head of a great railroad. And he is wise. He is many 
times a millionaire. Why should he devote his life to un- 
necessary care and labor ? Bich men in this country are 
apt to work too hard. They do not enjoy life as men of far 
less wealth do in Europe. Under almost any administration 
the Baltimore & Ohio Boad has a great future before it. The 
road was built to draw the Western trade to Baltimore. This 
trade had been diverted from that city by the building of 
the great canals. New York & Philadelphia were receiving 
the lion's share of the traffic. The first stone on the Balti- 
more & Ohio Boad was laid by Charles Carroll, one of the 
signers of the Declaration of Independence, in 1828. The 
road was opened to Wheeling in 1853. The firm of Bobert 
Garrett & Sons was established in 1849, and was originally 
engaged in the wholesale grocery trade. When the road 
reached Wheeling its finances were at the lowest ebb. The 
house founded by the grandfather of the present head of 
the road bought largely of its bonds at a very low figure, 



JOHN H. INMAN. 557 

and this marked the first connection of the Garrett family 
with this great property. The house of Garrett & Sons 
still exists as a banking establishment under the manage- 
ment of T. Harrison Garrett. In 1853 Baltimore & Ohio 
stock could be bought for a song. Since then it has sold 
at as high as $225 a share. The improvement in the prop- 
erty was very largely due to the efforts of John W. and 
Eobert Garrett. 

The recent embarrassing complications of Mr. Garrett in 
connection with the management of his railroad and tele- 
graph companies, it is hoped, will only be temporary, and 
I expect to see him again, at no distant day, reinstated at 
the head of the great corporation over which he and his 
father presided. His present difficulties f are matters of cur- 
rent newspaper record and comment, and I need not, there- 
fore, enlarge upon them here. As shown by the latest re* 
port, the Baltimore & Ohio Bailroad is virtually in a good, 
prosperous and solvable condition, and I have no doubt that 
the Drexel-Morgan syndicate which has undertaken to put 
the property on a still more solid and durable basis with the 
ten million loan which it has negotiated, will uprightly do 
its whole duty, and in due time return the trust considerably 
enhanced in value to Mr. Garrett, his heirs and assigns. 

John H. Inman, another member of the Southern railroad 
circle, was born in Tennessee. He is tall, fine looking 
and soldierly in appearance. He is one of the shrewdest of 
the capitalists who have invested large amounts in Southern 
enterprises. He came to New York from Atlanta, quite 
poor, after the civil war. In the war he was a quartermas- 
ter's clerk, and his old quartermaster afterwards became one 
of his brokers on the Cotton Exchange. Young Inman 
went into the office of an uncle on arriving in New York, 
and learned the business of a cotton broker. He was clear- 
headed and successful. After he became a partner in the 
firm he added very materially to his wealth by carrying 
cottpn for the premiums on the options. He is recognized 



558 WESTERN AND SOUTHERN FINANCIAL LEADERS. 

as one of the leaders of the Cotton Exchange. In recent 
years he has become a financier, has made large loans 
to railroads in the South, and has invested heavily in 
Atlanta real estate, and in iron enterprises in Birmingham, 
the rising Southern market. He was prominent in the 
reorganization of the Eichmond & Danville railroad system, 
in which he is largely interested. He is a director in the 
Eichmond Terminal and associate lines, as well as the 
Louisville & Nashville and other Southern roads. He 
invested nearly two millions in the Tennessee Coal & Iron 
Company. He is now about 50 years of age. He seems 
to be a man of destiny. He is a man of great force of 
character and exceptional business skill. He resides in 
New York, and is jrfjteessed of a large fortune. 

Ancestky in England— Brains in America. 

In this country no one cares about ancestry. The spec- 
tacle of Mark Twain weeping at the tomb of Adam is a 
humorous expression of American opinions on this general 
subject of ancestry. To save time he paid his devoirs to 
the fountain head without stopping at the Guelphs, the 
Tudors, the Bourbons, the Hohenzollerns, the Hapsburgs, 
or the Eomanoffs. There is no time, if there was any wish 
in this great country — shaking to the tread of gigantic 
business — to inquire, " Who was his father ?" There is only 
time for such questions as, " What do you know ?" " What 
can you do ?" " How have you succeeded ?" Integrity and 
ability stand a man in better stead in America than show of 
purple veins of Norman blood. Even in the aristocracy (so 
to speak) of brains, ancestry in one sense, so far from being 
an advantage, is apt to be precisely the reverse. A son of 
Henry Clay or Daniel Webster can never hope to attain 
the lofty pre-eminence of the sire, and suffer by compar- 
ison. Great men do not always have great sons. Eor 
one Pitt, the son of a great Chatham, there are hun- 
dreds of sons who intellectually dishonor great fathers. 



SURVIVAL OF THE FITTEST. 559 

Brains, intelligence, industry, energy, and pluck ; these are 
the talismanic words which stand for success in America, 
where no ghost of a dead feudalism hovers over the land, 
darkening it by its blighting presence. In England the 
first question, a silly echo of centuries, is, " "Who is his 
father?" But who are the nobility? Have they any title 
as such to the respect of right-thinking persons ? The 
nobility is running to seed, or rather the once noble tree is 
withering and dying ; it has borne its fruit and its time has 
passed away. In Scriptural language, "Why cumbereth it 
the ground ? How many of the nobility are now worthless 
roues, habitual seducers, dried up or half consumed by the 
fires of passion and debauchery! They are dying as the 
fool dieth, with a drunken leer on their shrunken faces and 
the stain of dishonor on their escutcheons. The Commons 
of England will yet redeem the nation from the thraldom of 
a worthless aristocracy. America is the true field for the 
human race. It is the hope and the asylum for the oppressed 
and down- trodden of every clime. It is the inspiring example 
of America — peerless among the nations of the earth, the 
brightest star in the political firmament — that is leavening 
the hard lump of aristocracy and promoting a democratic 
spirit throughout the world. It is indeed the gem of the 
ocean to which the world may well offer homage. Here 
merit is the sole test. Birth is nothing. The fittest sur- 
vive. Merit is the supreme and only qualification essential 
to success. Intelligence rules worlds and systems of 
worlds. It is the dread monarch of illimitable space, and 
in human society, especially in America, it shines as a 
diadem on the foreheads of those who stand in the foremost 
ranks of human enterprise. Here only a natural order of 
nobility is recognized, and its motto, without coat of arms 
or boast of heraldry, is " Intelligence and integrity." 



CHAPTER LI. 

ARBITRATION. 

How the System of Settling Disputes and Misunder- 
standings BY ABBITRATION HAS WORKED IN THE STOCK 

Exchange.— Why not Extend the System to Business 
Matters Generally ? — Its Great Advantages over 
Going to Law. — It is Cheap and has no Vexatious De- 
lays. — Trial by Jury a Partial Failure.— Some 
Prominent Cases in Point.— Jury "Fixing" and its 
Consequences. — How Juries are Swayed by their 
Sympathies.— A Curious Miscarriage of Justic before 
a Referee. — The Little Game of the Diamond Bro- 
ker, 

WALL Street has derived great prestige and character 
from the New York Stock Exchange. In fact, the 
Stock Exchange is Wall Street, so to speak, so much so that 
if the Exchange moved to any other locality, the latter would 
become the new Wall Street, to the utter oblivion of the old, 
which would soon be eclipsed and regarded as a thing of 
the past. 

The New York Stock Exchange has distinguished itself 
in many respects, but there is probably nothing for which it 
is likely to become more famous in history than its solution 
of the great problem of settling disputes aud misunder- 
standings by arbitration. Other financial bodies have tried 
the same substitute for ordinary law proceedings, but it 
would appear that greater success has crowned the efforts 
of the Stock Exchange in this particular experiment than 
any other corporate body. 

The large number of cases on record that have been 
amicably settled by arbitration within the past few years, 
in which law would have been formerly considered indispen- 
sable, seem to point to a period, probably not far distant, 
when arbitration will be the great and ultimate court of ap- 



5G2 ARBITRATION. 

peal in the large majority of civil cases. Several consider- 
ations will make it the most popular. It is cheaper, less 
complicated, not subject to vexatious delay ; it is more 
equitable, and the members composing the Arbitration Com- 
mittees are business men, who are quick to discern, accurate 
in perception, sound in judgment and decisive in drawing 
their conclusions on business principles. 

The expense of arbitration is a mere trifle compared with 
the enormous sums swallowed up in litigation. 

Transactions involving millions of dollars annually in the 
Stock Exchange are made subject to settlement by this 
method of arbitration in the event of any difference of 
opinion arising in any particular case. Very few instances 
occur in which there is any necessity to carry the case be- 
yond the jurisdiction of the Arbitration Committee. 

The number of cases actually settled in this way would 
probably cost half a million dollars annually if they had to 
be brought into court, to say nothing of the incidental ex- 
penses, which would amount to as much more, arising 
from delay, on the scale of present charges by the legal pro- 
fession, even leaving out our own Evarts, who is probably 
the Boss charger of the Bar. 

The success attending the system at the Stock Exchange, 
I think, goes far to prove that the method might be univer- 
sally extended to the great pecuniary interest and personal 
comfort of business men throughout the country, for the 
adjustment of their misunderstandings and grievances among 
one another. 

My object in writing upon this subject has for its basis 
the hope that this chapter may catch the eye of some of our 
great merchants in this and other large cities, and that it 
may suggest to those of them who have not contemplated 
the subject already, the advisability and necessity of estab- 
lishing for themselves a similar method of arbitration to 
that which has been so successful in the Stock Exchange, to 
be final and without appeal, in their respective business 
affairs. 



PREJUDICES OF JURORS. 5G3 

Experience has fully demonstrated that trial by jury is in 
innumerable instances a signal failure ; especially has this 
been so since what is known as " jury fixing " has become 
so common in the courts. The practice of bribing jurors 
has now become a secret profession, and is so ably con- 
ducted that it is almost impossible, except in rare instances, 
to expose it. 

But apart from this vicious and criminal practice of tam- 
pering with juries, there are many other reasons why it is 
next to impossible, in a large variety of instances, to obtain 
justice from an ordinary jury. 

Human sympathy plays a very important part in the ver- 
dicts of juries generally. I mean by this, class sympathy. 
A business man who is regarded by the community as rich 
and powerful, can hardly expect justice from a common jury 
unless the party opposed to him occupies a similar station 
in society. Where the position of either the plaintiff or de- 
fendant calls forth sympathy with regard to worldly means, 
in the large majority of cases the ordinary jurors will bring in 
a verdict in favor of the man of small or moderate means, 
believing that they are in duty bound to sympathize with 
the oppressed. In a case where a clerk or a woman, for in- 
instance, is a party to the suit, it is next to impossible for a 
man of means to receive equity at the hands of the great 
palladium of our liberty. I am sorry it is so, but I speak 
feelingly in this matter, as I have myself been a victim of 
this unworthy class prejudice, in a country where all men 
are theoretically equal. 

Counsel usually make a great display over the cases of 
impecunious clients, out of all proportion to their magni- 
tude. Mole hills become ostensibly transformed into moun- 
tains in the eye of the highly imaginative lawyer, who works 
himself up into such a dramatic pitch of enthusiasm about 
the wrong3 of his client, that he appears to be in dead earn- 
est. He infuses the same feeling into the jury, who are 
beguiled into solemnity by the force of forensic oratory, and 



564 ARBITRATION. 

fail to appreciate the farcical side of the case, but are 
totally swayed by sentiment and prejudice, to the utter ex- 
clusion of the evidence. 

There are many objections, also, to trial or partial trial, 
by referee, although it is in many instances an improve- 
ment on the jury system. It is, however, amenable to num- 
erous and flagrant abuses. 

As an instance of this, I shall briefly relate a case which 
some time ago came within the sphere of my own observa- 
tion. 

A gentleman of my acquaintance had a claim for a very 
large amount against a financial man in good circumstances, 
and it was sent to a referee, who, after a long, tedious and 
exhaustive investigation of all the facts, gave a decision in 
favor of the plaintiff for several hundred thousand dollars. 

Soon after the decision, the defendant saw the plaintiff, 
and made him an offer of thirty thousand dollars to settle 
the matter, at the same time stating that if he did not ac- 
cept the offer, he would either appeal the case or hunt up 
fresh evidence for a new trial. 

This offer of settlement, which was but a small part of 
the amount awarded by the judgment, was naturally de- 
clined by the plaintiff, and application was made to the 
court under the pretense of newly discovered evidence, for a 
new trial, which was granted. Thereupon, after another 
tedious trial, the old beaten track having been gone care- 
fully over again, without omitting any of the aforesaid 
" whereases, neverthelesses and notwithstandings," or any 
of the monotonous flummery connected therewith, the case 
was again sent to the same referee, before whom the same 
wearisome inquiry was repeated. This time, however, the 
referee relieved the monotony, at the close, by rendering a 
decision in favor of the defendant, for a large sum, instead 
of the plaintiff, as on the former occasion. 

This decision was a genuine surprise to the plaintiff, who 
then called upon the defendant and expressed in severe 



A CORRUPT REFEREE. 565 

terms his indignation at the change that had been unwar- 
rantably made in the decision of the referee, saying he 
would not submit to it. He was extremely firm in his 
manner and said : u I positively assure you that if the judg- 
ment is enforced this town will not be large enough to hold 
you and myself." 

The successful defendant then said, M What do you want 
me to do ?" 

" Well," replied the plaintiff, magnanimously, " I simply 
desire to be released of that judgment.'' 

"Will that satisfy you?" asked the other litigant. 

"Yes," he replied, "under the circumstances. I have had 
enough of such law, and want to get rid of it." 

"Well," said the defendant, "I will do it, and give you a 
receipt in full in satisfaction of all claims." 

After this cordial termination of the trouble, the defend- 
ant turned to the plaintiff and said confidentially, " I am 
sorry you did not take the thirty thousand dollars which I 
offered you. I would sooner you had it than anyone else, 
as I had to pay it all the same." 

The profound lesson of humility taught in Scripture, that 
" the first shall be last and the last first," was fully verified 
in this instance. 

As litigation is now carried on either before a jury or a 
referee, it has a tendency to stir up bad blood, which grows 
worse as the case progresses through its various and lengthy 
stages, leaving relations more strained and matters for both 
parties much worse at the end than at the beginning. As 
the case drags its slow length along criminations and recrimi- 
nations between plaintiff and defendant are constantly elic- 
ited, and family matters that should be regarded as sacred 
are dragged before the eyes of the public, subjected to un- 
friendly criticism, and innocent parties who have no inter- 
est in the case are subject to have their private affairs made 
known, to their great mortification, and often to their great 
detriment, having a cloud thrown over their reputation long 
after the litigants have passed away. 



566 ARBITRATION. 

Thus the evils of litigation are far reaching in their 
consequences, and frequently exercise a most deleterious in- 
fluence over the character and prosperity of those who have 
nothing to do with the original parties to the contest, and 
have do interest in the suit. 

The expense is also another important consideration in 
going to law, and is only to be measured by the bank bal- 
ances of the contending parties. 

The time lost in the methods of procedure now generally 
adopted is of the utmost importance, especially to people the 
success of whose business in a large measure may depend 
on their personal attention thereto. It is perfectly as- 
tounding to reflect on the important portion of a per- 
son's existence that may be lost in one case, which, from its 
inception in the lower court up through the regular grada- 
tions of the Supreme Court and Court of Appeals when a 
new trial is had, probably thus going over the entire ground 
twice, may consume all the way from five to ten years under 
the perpetual pressure of mental anxiety and torture before 
the end is reached, when at least one, and sometimes both 
parties, are financially ruined. 

The worry, wear and tear of attending to a lawsuit in the 
capacity of either plaintiff or defendant is perfectly incom- 
prehensible to those who have never passed through the try- 
ing ordeal. A person in either capacity, with his train of 
witnesses, is obliged to dance attendance on court every 
day, no matter how pressing the necessities of his own busi- 
ness may be. Books must be carried thither, and all his 
establishment must be upset for the convenience of the 
court and to gratify the whims and caprices of the opposing 
litigant. The business places of the two contending parties 
are entirely disarranged, and the help thrown into a state of 
partial disorganization. Each party to the suit seeks to 
give the other all the trouble he possibly can, and to subject 
him to all the sources of annoyance his imagination can 
devise. Such is the spirit imbued by going to law. 



HOW TO EXTEND THE SYSTEM. 567 

A lawyer, therefore, who has about half a dozen mod- 
erate cases has thus his entire time occupied, and while his 
clients keep out of bankruptcy his income is as good as the 
annuity of a life insurance company, and frequently the 
security is better. 

The effect of the change which I propose, in the majority 
of cases where merchants and business men find it necessary 
now to resort to legal methods, would perhaps not render 
the life of the ordinary lawyer so happy as it is under the 
present system, but the merchants would gain ten-fold more 
than the lawyers would lose, so the effect upon the entire 
community would be incalculably beneficial. 

The system of arbitration which I contemplate could be 
extended in every line of business throughout the entire 
country, with a Central Association in New York or any 
other city that might be agreed upon. In fact, there might 
be several business centres, one in each important city, 
with its ramifications extending throughout the section in 
which its commercial interests more immediately clustered. 
Branch associations could be organized in the smaller cities 
and towns, enjoying all the facilities of direct communica- 
tion with the central body, and availing themselves of all 
the information and statistics there collected, and the nature 
of decisions in special and leading cases of settlement. 

Each association in its own city or town should be con- 
sidered fully competent to deal with its own affairs, the Cen- 
tral Association being only consulted as an advisory body. 
I should recommend also that each association should have 
a governing committee, which should constitute its Court of 
Appeal, whose decision should be deemed final. 

It would hardly be necessary to prescribe penalties for 
the few isolated cases that would kick against the arbitra- 
tion system, and resort to law, as their legal experience 
before they got through would be punishment sufficient 
without the association taking any further action. Disci- 
pline, however, of a mild character, would have to be 



568 ARBITRATION. 

enforced in these and other special cases, for the better effi- 
ciency of organization. 

It might be well to have a rule whereby the parties sub- 
mitting their cases to arbitration should recognize the neces- 
sity, after having the methods of procedure thoroughly 
explained to them, of putting themselves under obligations 
to abide by the decision. 

In carrying out a national idea of this kind of association, 
business could be greatly facilitated and much expense 
saved by the various committees having due regard to their 
places of meeting, so as to be as near as possible to the cen- 
tre of the greater number of the witnesses in each particular 
case. 

The courts, which are now greatly overworked, would be 
immensely relieved by this system, and they would have 
more time to sift important and exceptional cases which, in 
their nature, could not possibly be made subjects of arbi- 
tration. There are quite enough of such cases to occupy 
the time of the various courts. 

One of the most vexatious and irritating things connected 
with court trials is the constant attendance required, even 
when no progress is being made in the case. The expenses, 
too, are always accumulating. 

Though nothing is accomplished the attendance of the 
lawyers is far from being a labor of love. Their services 
must be handsomely rewarded by the litigants. 

Such a process of settlement as I suggest would not, after 
all, be any great hardship to the bes r t of the legal' fraternity, 
as there would be enough work left for them, but it would 
afford immense relief to the now overworked judges, while 
it would facilitate and forward the ends of justice to an ex- 
tent that can hardly be imagined by those who have been 
always accustomed to the slow and monotonous machinery 
of the law courts, and it would help to weed out the large 
camp following of pettifoggers, whose occupation would be 
partially gone. 



SURETIES AND MEN OF STRAW- 



569 



There is a great deal of time lost in regular court busi- 
ness, causing much exasperation to the parties to a suit, in 
settling mere technicalities and side issues of law, before the 
real merits of the case can be reached. Many of these tech- 
nical delays could be easily disposed of by business men, 
on business principles, and by taking a simple and common- 
sense view of the matter, by the usual methods pursued in 
arbitration. 

This new method of settling disputes would do away with 
the farce of giving bonds in many cases, which is another 
great source of annoyance, and which, after all, only amounts 
to a mere formality in a large number of cases, and in many 
others a very hollow and fraudulent pretense, as many of 
the bondsmen are only men of straw, and though technically 
qualified, are not in reality responsible for the obligations 
undertaken by them. 

When good, reliable sureties are offered, in many in- 
stances they are put through an irritating course of exami- 
nation in relation to their private affairs, much of which is 
entirely unnecessary, and only designed to perplex and annoy 
them. They are thus obliged to expose matters relating to 
their private business, about which the public have no right 
to know anything, aud they are often examined in such a 
way, as if they themselves were on trial, and were attempt- 
ing criminal concealment of something that they had a right 
to disclose. A good deal of this arises from the impudent, 
unmannerly style of certain lawyers, who treat a man as a 
criminal suspect, when he has no interest in the case what- 
ever, but has simply come voluntarily forward to assist a 
friend in trouble. 

This is all, however, in the present method of procedure, 
connected with the machinery of so-called justice, and this 
kind of abuse has been carried to such an extent in some of 
the instances just referred to, that very few responsible par- 
ties, who know anything about the modus operandi of quail- 
fying as a surety, are willing to respond to such calls of 



570 ARBITRATION. 

friendship. Hence, one of the difficulties in obtaining good 
bondsmen, and an additional reason why the professional 
straw men are so plentiful. 

It probably helps the business of the latter, between 
whom and the abusive lawyers there may be an under- 
standing on " boodle " principles. 

I shall relate an instance which I consider worthy of per- 
manent record illustrative of the matters to which I here 
refer, in which my firm was victimized. 

On the occasion referred to, my firm sued a client for 
a just debt of sixteen thousand dollars. The case was sent 
to a referee, whose standing, in his particular line, was un- 
questioned at the time, and very few men, in his circle, had 
better family connections. He stood high in his profession 
and both side were satisfied with the choice. The case was 
very long and tedious, having been drawn out to a most pro- 
voking extent by encumbering the record with immense 
piles of irrelevant matter. The renewed calls for legal fees 
on both sides were numerous and vexatious, yet there was 
no help but graceful submission to the payment of this 
tribute. 

After a number of years it was reluctantly conceded by 
the lawyers that the evidence was all in on both sides. The 
litigants breathed heavy and responsive sighs of relief, each 
side being confident of victory. 

A short time prior to the close of the case, the referee 
spoke to me, gratuitously offering his advice to settle the 
case, as he said he intended to give a decision adverse to my 
firm. To this I demurred, and expressed my determination 
to fight the case to the bitter end. 

The result was, however, that my firm not only did not 
get a decision in its favor for the $16,000 to which it was 
justly entitled, but this claim was wiped out by this Daniel 
come to judgment, who gave a decision in favor of the de- 
fendant for $132,000. 

I regarded this award as such a terrible outrage upon jus- 



A REFEREE DISGRACED. 571 

tice that I obtained a stay of proceedings, and made an ap- 
peal, setting forth therein the advice given to me by the 
referee to settle before the case was closed. 

Judge Fancher, who wrote the opinion on behalf of the 
bench, consigned that referee to everlasting disgrace, and 
set aside his opinion. There the case ended. 

Another instance in my experience will illustrate the point 
which I have made in regard to the sympathy exhibited by 
juries with those whom they regard, rightly or wrongly, as 
oppressed. At one time I had employed a clerk at the rate 
of $2,000 per annum. He was a great disappointment to 
me in regard to competency, for the work for which I had 
engaged him, and for his entire lack of application to, as 
well as deficiency in, the department to which he was as- 
signed. At the end of the first year, therefore, I gave him 
notice, in presence of two competent witnesses, that I should 
not require him after his year had expired, and advised him 
to look out at once for another situation. On the last day 
of the year he came to me with tears in his eyes and said 
that he had been unable to obtain another place, owing to 
the bad times prevailing, and begged me, in the name of his 
family, who was solely dependent upon him, to keep him in 
my services still longer, until he could get another situation. 
Purely out of sympathy for his condition, and believing his 
story, which was very plausible and pathetic, I told him 
that he might remain a short time longer on the same salary, 
but that I should require him to use all his exertions to get 
another place as speedily as possible. 

When he entered on the second term his services were no 
more use to me than a fifth wheel is to a coach. After the 
expiration of a few weeks, I sent for him and inquired if he 
had got another situation ; I said I had given him ample time 
to obtain one, and that I could not consent to keep him any 
longer. I therefore requested my cashier to draw a check 
to his order for the balance of his wages, up to date, filled 
in as a part of the body thereof with the words " payment in 
full for all claims and demands." 



572 ARBITRATION. 

Thereupon he left my employment, but called repeatedly 
at the office afterward. I assumed that his visits were sim- 
ply for the purpose of paying his respects. At the expira- 
tion of the second year I received a notice of suit which he 
had commenced in Brooklyn for the balance of salary due 
him for the year, being at the rate of $2,000 a year for ten 
months. 

The case came up duly in the Brooklyn court, his only 
witness being his father, who had made several calls upon 
me after the discharge of his son, on the strength of which 
he set forth, in his evidence, certain conferences that should 
have taken place between him and myself, the greater part 
of which were purely fictitious. He was the only witness 
called on the side of the plaintiff, while I had five or more 
witnesses to substantiate the facts, as I have related them, in 
relation to the young man's discharge, all of them being of 
most excellent character. 

Strange to say, the jury entirely ignored the overwhelm- 
ing testimony on my side, and seemed to be altogether in- 
fluenced by the "spread-eagle" address of the defendant's 
counsel, which I am free to say was both able and ingenious. 
He drew a harassing picture of the poverty of the young 
man, and presented the imminent destitution of his family 
in a most pitiable light, brought about solely by the ruth- 
less treatment of this hard-hearted millionaire and bloated 
bondholder. Hence the verdict was made, through the force 
of counsel's oratory, to depend exclusively on the sympathy 
of the jury, irrespective of the evidence. 

The case occupied several days, with fiYe or six employees 
from my office in constant attendance, who were obliged to 
carry to and from court, every day, huge books and large 
quantities of papers, disturbing the regular business of the 
office in a very disagreeable manner. 

After counsel had gone over the ordinary rigmarole in re- 
viewing the testimony, the jury went through the formality 
of retiring, to keep up appearances, and after a brief interval 



A JURY IGNORING EVIDENCE. 573 

of absence returned to court with a verdict for the deeply 
injured clerk for back pay, together with interest for the ten 
months during which he had not rendered me an hour's 
service. 

My lawyer was easily able to obtain fresh evidence from 
other sources, but he had not considered it necessary to put 
any more witnesses on the stand, as he had regarded the 
testimony already produced more than ample, so sanguine 
was he of success, and so fully satisfied of the plainness of 
his case, which he considered had only one side, and that in 
my favor. 

The jury, however, put the boot on the other foot, upset 
all my counsel's calculations and showed him that his 
law went for nothing where the famous twelve had the right 
to judge and legislate at the same time in accordance with 
their sympathies and prejudices. Still he went through the 
formality of going before the judge with new evidence, and 
applied for a new trial, which was ordered on the ground that 
the verdict was not in accordance with the weight of evi- 
dence. 

The new case was called after the customary delays, and 
the same ground was duly traversed again, with my addi- 
tional witnesses, before another highly intelligent jury, 
whose prejudices were all on the side of the greatly injured 
young man, who sought twelve months' pay for two months' 
useless services. The only witness that appeared again for 
the defendant was his faithful and veracious father, whose 
memory was marvellously correct in relation to his former 
statements on the first trial. 

There is an old proverb which says that it requires such 
men to have good memories. I need not quote it, as almost 
everyone knows it. 

To make a long story short, however, that forensic orator 
appeared again for his poverty-stricken client, armed with 
all the old enthusiasm exhibited on the former trial. He 
had not much new matter to present, but his dramatic attri- 



574 ARBITRATION. 

butes, by dint of longer practice, and more familiarity with 
his side of the case (it was only necessary for him to study 
the one side) had become considerably improved since his 
former effort, and it is needless to say that he carried the 
jury with him. 

By that intelligent safeguard of our liberties, the jury, the 
second trial was only regarded as an aggravated case of per- 
secution, on my part, and the verdict was given more cheer- 
fully in favor of the plaintiff than on the former occasion. 

Although it would have been much better for me, from a 
financial point of view, to have paid the amount of the exac- 
tion, with all the legal and illegal fees and impositions con- 
nected therewith, yet I felt disclined to be bamboozled in that 
way. 

"When the court was applied to for another new trial, the 
judge said, " I have already given you one new trial, taking 
she responsibility. The relief you now ask has already been 
before two juries, and I am not willing to take upon me any 
additional responsibility in the matter. You must there- 
fore look for any further rights or redress to which you may 
consider yourself entitled, to the Court of Appeals." 

The case is now, therefore, awaiting the good time and 
discretion of the Court of Appeals, where it will, in all prob- 
ability, be heard and adjudicated upon sometime within the 
next ten years. In the meantime the young man is happy 
in the reflection that his judgment is a good investment, 
drawing six per cent, interest. 

There is still another case illustrative of some of the pe- 
culiar points referred to, and showing the truth of the maxim 
among lawyers that, " You never know what a jury will do," 
in which I had the honor, or the misfortune to be joined. 

A well-known outside broker in "Wall Street, who had a 
large experience in transacting business for Mr. Sage and 
other notabilities of the street, in " puts," " calls," and other 
exterior securities, came to me one afternoon and asked me 
if I didn't want to buy a pair of diamond earrings. 



SHARP DIAMOND DEALERS. 575 

At that time I had not begun my career as a dealer in dia- 
monds, except in one solitary instance, and that was when I 
purchased the wedding ring, which is one of the requisites 
in a matrimonial contract for a long term. I was, therefore, 
comparatively a tyro in the business, and the party with 
whom I was dealing did not fail to take advantage of 
my inexperience. I made some inquiry about the diamonds 
from this broker, to which I received apparently satisfactory 
answers, and I concluded they would suit my wife, and as I 
had had a good day's business I made him an offer of a 
thousand dollars for the precious ornaments, which he 
quickly accepted, and I paid him the money. 

In the course of a few weeks after I was waited upon by a 
diamond dealer and his lawyer, with neither of whom I had 
the honor of any previous acquaintance, and they accord- 
ingly introduced each other. The diamond dealer intro- 
duced the lawyer and vice versa. I immediately concluded 
I was going to get a good stock order from both of them, 
but I was soon disappointed as well as surprised to find that 
these gentlemen had called on an entirely different kind of 
business, which was totally devoid of commissions on any 
stock transactions. 

They said I had a pair of earrings belonging to them, and 
I declined to give them up except on return of my thousand 
dollars. 

These two gentlemen bade me good day, and in the course 
of time I was served with the usual legal papers in a suit 
which reached the calendar after some time. The young 
man who sold me the diamonds was put on the stand. He 
testified that he had received them from a certain diamond 
broker, but not the dealer in question, with whom he had 
had no connection whatever. 

The diamond broker, it appeared, had long been agent for 
this dealer, selling diamonds and had, as set forth in the 
evidence, sold over ten thousand dollars' worth in a few 
years. 



576 ARBITRATION. 

During the trial a paper was produced to prove that this 
broker had received these diamonds to show them to a cus- 
tomer, and as it turned out I happened to be the customer. 
The money which I had paid him for them he had failed to 
turn over to his employer, of whom I had no knowledge, 
nor had I any chance of knowing him in the transaction. 

All the facts were presented, as above related, to the jury, 
who, after due deliberation, decided that I must give up the 
diamonds and suffer to be cheated out of my thousand dol- 
lars. 

This case is now on appeal. I have since offered to re- 
linquish the diamonds and lose my money, rather than suffer 
the expense and trouble of continuing the litigation, but 
plaintiff wants to bleed me further to the tune of $300 to 
cover his law expenses. To this illegal tribute I have not 
yet submitted, and have resolved to see what virtue there 
is in further defense before a higher tribunal. 

"Millions of dollars for defence, but not a dollar for 
tribute," is a maxim which it is expensive to follow, but 
after all, the result of such a course, if one can afford it, 
may be morally healthy. 

I consider that these cases, in which I acted a rather un- 
enviable part, are only samples of many which constitute 
one of the best arguments for a general system of arbitra- 
tion, such as I have briefly and imperfectly outlined. 



CHAPTEE LII. 

NEW YORK AS A FINANCIAL CENTRE. 

Its Past, Its Present, Its Future. -Banking Decadence. 
— Growth of Interior Centres.— Obstruction from 
the National Bank Laws. — Belief Demanded.— Be- 
quirements of the future. 

WHAT New York has been as a centre for the settle- 
ment of financial transactions is a matter of history ; 
what it is destined to be, in that respect, may not be so en- 
tirely certain as some people hastily assume. There are some 
facts which seem to suggest the question whether our city 
may prove able to retain its past proportion of the vast set- 
tlements of this ever-growing continent ; and, although there 
is nothing to warrant very positive opinions about the 
future, it must be conceded as an unquestionable historic 
fact that in late years there have been symptoms of positive 
decadence in the status of our financial metropolis. 

In the past there have been three separate successive sets 
of conditions directly affecting the financial standing of New 
York. First, there was the period when this city was the 
distributing point for nearly all the importations, and for the 
bulk of our domestic manufactures through all parts of the 
country. Equally, New York was the almost sole port of 
export for Western products, and although the exports for 
the cotton States were made direct from their local ports, 
yet the financial transactions connected with those shipments 
were effected through this city. Then New York had vir- 
tually no competitor as an exchange centre. 

Next came a period during which the larger Western 
cities, especially Chicago and St. Louis, aspired to become 
distributors of foreign and Eastern merchandise ; a change 
very naturally following the rapid growth of population in 
the West and Southwest. Thus a vast jobbing trade became 



578 NEW YORK AS A FINANCIAL CENTRE. 

rapidly established at these interior centres, and New YorPs 
share in the distribution of goods to the retail trade became, 
in a large measure, confined to the Middle and nearer West- 
ern States, and to a portion of the South. The jobbers of these 
new interior centres, however, had still to get their supplies 
of merchandise from or through the Eastern metropolis ; so 
that, whilst we lost much of our jobbing business, we 
retained, with some limited exceptions, the importing and 
commission branches, together with their ordinary rate of 
increase. 

We are now in the beginning of a third and still more 
important era, during which both the importing and com- 
mission branches of our trade are threatened with invasion. 
The Western jobbing houses have attained a standing 
which warrants their importing direct from the countries 
of production, instead of through New York. Another 
Western and Southwestern consumption has risen to such a 
magnitude as to encourage the creation of manufacturing 
establishments in the vicinity of the markets. The West is 
rapidly becoming a competitor in the leading branches of 
manufacture with the East, and is evidently destined to 
supply itself, at no distant day, with a very large portion of 
the domestic merchandise hitherto contributed through New 
York merchants, and with the facilities of New York banks. 
Nor is this all. Chicago and some other Western cities are 
throwing off their dependence on New York intermediaries 
for the exportation of grain and provisions, selling them 
direct to Europe, and shipping the goods on through bills of 
lading. 

These changes are not the result of any mere spirit of 
blind recklessness grasping after business. They are the 
product of actual natural economies, and appear to be so 
decidedly in the interest of the Western merchants that it 
can hardly be doubted that the new methods have come " to 
stay." 

Clearly, then, the natural development of national produc- 



RISE AND DECLINE OF THE CLEARING HOUSE. 579 

tion of commerce is to build up independent financial cen- 
tres at the interior, the effect of which can only be to check 
in some measure the growing ascendancy of New York. 
Perhaps few among my readers will be prepared for the 
following statistical facts bearing on this question ; the 
conclusions to be drawn from which are not very flattering 
to the pride of the " Gothamites." 

The transactions at the New York Clearing House are the 
surest indication of the standing and progress of this city 
as a financial centre. The records of that institution show 
that its annual exchanges rose step by step from 5,750 mil- 
lion dollars in 1854 to 48,566 in 1881, an increase of 744 per 
cent, in 27 years, or at the average rate of 1,585 millions 
per year. From 1881 there has been the following remark- 
able rate of decline : 

In 1881, the exchanges were 48,566 millions of dollars. 
" 1882, " " " 46,553 " « 

" 1883, " " " 40,293 " 

" 1884, " " " 34,092 " " 

" 1885, " " " 25,251 " " 

Thus it will be seen that there has been a decline in the 
transactions of the Clearing House banks of 23,315 millions, 
or at the rate of 48.4 per cent., within the last four years. 
Last year the exchanges fell below even those of twenty 
years previous, when the amount was 26,032 millions. Of 
course, this very remarkable decrease in the volume of trans- 
actions is, in part, attributable to the great falling off in the 
amount of speculative transactions in 1885, as compared 
with 1881. This, however, can only account to a compara- 
tively small extent for such a vast change. Something is 
also to be attributed to the general decline in the prices of 
merchandise and investments during the period ; but this ex- 
planation is also entirely inadequate, for the average fall in 
prices did certainly not exceeded 20 per cent., while the de- 
crease in the exchanges, as already shown, had been 48.4 per 
cent. Moreover, on the other side, some offset against the de- 



580 NEW YORK AS A FINANCIAL CKNTRK. 

cline in speculation and in prices must be allowed on account 
of an increase of five to six millions in the population of the 
country during the interval ; which alone should call for an 
increase of 10 per cent, within this period. It is still more 
significant that, since the year 1872, the capital of the banks 
in the New York Clearing House has been reduced from 
$84,400,000 to $58,600,000, a decline of 30 per cent. ; which 
at least implies that banking has become less profitable 
than it formerly was, and which could scarcely have 
happened if New York had retained its wonted share of the 
increase of financial operations arising from the growth of 
population and commerce in the nation at large. 

Some light may be thrown on these changes by a com- 
parison between the ratio of progress in the transactions of 
the Clearing Houses of New York and Chicago respectively. 

In 1866, the first complete year of the Chicago Clearing 
House, the clearings amounted to $453,800,000, while in 
1885 the figures reached $2,318,500,000— an increase of 410 
per cent. At New York, in 1866, the clearings were $28,- 
717,000,000, and in 1885 they had fallen to $25,250,000,000 
— a decrease of 12£ per cent, within two decades of great 
national progress, and while the population tributary to this 
city had increased over twenty millions. 

In the year 1879 — the period of the resumption of specie 
payments and of the beginning of a great revival of com- 
merce and of financial enterprise — the Chicago Clearings 
were $1,257,700,000, and last year they were $2,318,500,000, 
showing an increase of 84.3 per cent. The clearings at New 
York, within the same period, show an increase of about i 
of one per cent. 

It has already been shown that the capital of the banks 
in the New York Clearing House (exclusive of surplus) fell 
30 per cent, below 1872 and 1886 ; on the other hand, the 
capital of the banks in the Chicago Clearing House ros^ 
from $9,845,000 in 1872 to $16,928 000 in the present yaar. 
an increase of 72 per cent. 



BANKING FACILITIES INADEQUATE. 



ms 



The foregoing comparisons show that although the clear- 
ings at Chicago are only about one-tenth those of New York, 
yet the former city is making very rapid strides, while here 
we are virtually retrograding, and confirm the conclusion 
above expressed, that the importance of New York as a fi- 
nancial centre is suffering from diversion of settlements and 
of banking facilities to the larger cities of the interior, and 
especially to Chicago. 

So far as this tendency is the result of natural changes in 
conditions, it is inevitable and must be permanent, if, in- 
deed, it be not destined to gain in force and extent. But so 
far as the change is due to artificial obstructions to banking 
operations, it is susceptible of modification. 

And here I may be permitted to venture certain suggest- 
ions which may quite possibly encounter objections from 
men more than my peers in banking experience and wisdom. 
It has long been my conviction that the banking arrange- 
ments existing at New York are far from satisfying the re- 
quirements of a city that not only aspires to be, but also 
possesses many adaptations for occupying the position of 
the great financial centre, not only for domestic settlements, 
but also for international exchanges. 

The bulk of our banking transactions are done by banks 
incorporated under either national or State laws. Admirably 
as the national banking system, taken as a whole, is construc- 
ted, yefc it includes some important positive disqualifications 
for its institutions performing an important class of opera- 
tions essential to a great centre of exchanges. It was, per- 
haps, not to be expected that a system designed mainly for 
provincial cities and for rural populations should adequately 
provide for these broader wants. Nor could any uniform 
and homogeneous system be expected to be very perfect 
and satisfy at the same time both classes of requirements. 
Interior banks, whose management must be expected to be 
more or less lacking in experience and competency, may 
need to be placed under legal restraints, which, in the case 



£90 NEW YORK AS A FINANCIAL CENTRE. 

of a thoroughly conducted metropolitan bank, would be not 
only needless, but positively injurious. Unfortunately, this 
discrimination has received little recognition in our national 
bank legislation ; on the contrary, that larger discretion 
which should have been conceded to the higher training and 
more select ability that administer the metropolitan banks, 
has been ignored, and heavier restrictions have been placed 
upon the New York national banks than upon those of any 
other part of the national system. 

The " reserve" laws are oppressive to no better purpose 
than that of positive injury. All other banks than those of 
New York are permitted to count in their reserves any funds 
resting with their " redemption agents ;" and this item 
usually constitutes, in the case of banks of the " other re- 
serve cities," 41 per cent, of the total reserves held, and in 
the case of all other banks about 60 per cent. The New 
York banks, on the contrary are compelled to hold their 
entire reserve (25 per cent, of their deposits) in the form of 
lawful money. Nor is this the heaviest embargo. The re- 
serves are not permitted to be used when the occasion arises 
for which a bank reserve is always presumed to be provided. 
The moment a bank allows its reserve to fall below the re- 
quired 25 per cent, it becomes the duty of the Comptroller 
of the Currency to close its doors and put it into liquidation 
if the deficiency be not immediately made good. If panic 
occurs, and depositors want their money, there is nowhere 
any power to relax the crushing force of this law, and the 
banks are therefore compelled to suspend payment to de- 
positors and in order to avert general ruin at such times 
they have to resort to the expedient of making their cash 
assets available in common, thereby saving themselves and 
their customers outside of and in spite of the destructive 
tendency of the law. Of course, the danger of running into 
such a crisis as this creates a feverish dread in all times of 
special stringency in the money market. All eyes are at 
such times fixed upon the reserve "dead line;" and, as 



REORGANIZATION UNDER STATE LAWS. 583 

that limit is approached, loans are artificially contracted, 
depositors draw their money, and the very reserve that 
should be used for elasticity and to relieve periods of 
special tension become the certain cause of panic and ruin. 
A banking centre whose banks are periodicallyexposed to 
dangers of this serious character, and where the law unites 
with adverse circumstances to foster panics, is hampered 
with the worst possible disqualification for performing those 
higher and broader functions of banking which demand 
freedom of discretion and elasticity of resource. 

This evil appears all the greater when it is considered 
that the amount required to be set apart as so much idle 
reserve ordinarily exceeds the entire capital of the banks. It 
might be supposed to be serious enough that such a large 
proportion of the resources of the bank should be held per- 
petually idle and earning no interest ; but when this sacri- 
fice of earning capacity is made for a purpose that brings no 
advantages, but rather a very serious danger, the effect can 
be nothing less than an unwholesome and very injurious 
restriction upon banking operations, and it is not surprising, 
therefore, that the national banks of New York city exhibit 
decadence instead of progress. 

What is needed to enable this metropolis to reach the 
financial status to which it is entitled is a class of banking 
institutions possessing facilities and functions much broader 
and freer than those conferred by the national charters. It 
is out of the question to hope that these facilities may be 
provided through modifications of the national bank sys- 
tem. The banks, and especially those of New York, have 
to encounter so much prejudice and ignorant demagogism 
from Congress, in seeking any modification of the national 
system, that they would sooner endure almost any wrong 
than demand changes in the law. Their only redress i3 in 
reorganizing under the State laws, which many of them have 
already done, whilst new institutions almost uniformly pre- 
fer the State system. To meet the wants here contemplated, 



584 NEW YORK AS A FINANCIAL CENTRE. 

it would probably be necessary to get from the State Legis- 
lature special authorization for forms and functions of bank- 
ing not now distinctly provided for under either Federal or 
State laws. 

The special business to be done by such a class of banks 
scarcely needs enumeration, much of it being so self-evident. 
In the present stage of our national development, it is be- 
coming a grave reflection upon our men of capital that we 
should remain almost entirely dependent on foreign bankers 
for the facilites for transacting our immense external com- 
merce. The necessity that formerly existed for this depend- 
ence can no longer be urged as an excuse. All the capital 
and the banking experience necessary to found and to ad- 
minister large credit and exchange institutions are ready to 
hand. A business of $1,200,000,000 per annum connected 
with our imports and exports would be available for this 
form of enterprise. Our export trade is crippled in many 
branches of business simply because it is found impossible 
to get the liberal credits necessary to facilitate consign- 
ments to distant markets. Manchester defeats us on cotton 
goods, not so much on the ground of prices or superiority 
of fabrics, but because her merchants can get any time or 
amount of credit required, whilst we have to market our 
goods on restricted credits and through Manchester agents, 
who at the same time are selling English products in com- 
petition with ours. The English exporter has the ad- 
vantage of being able to get his credits from the bank 
with which he keeps his account, while the American has to 
go to a foreign banker, who has no inducement to consider 
his convenience or to moderate his charges. The natural 
place for an export merchant to keep his account is with the 
bank that grants him his credits ; and this fact suggests the 
facility with which banks of the kind here suggested could 
build up a large business. 

Every year we find it necessary to largely pledge our cotton 
crop in advance to provide the means for gathering and mar- 



CAN'T DEPEND ON FOREIGN BANKERS. 5S5 

keting it. Why should this money have to be drawn from 
England, especially as the crop is thereby subjected to 
the control of the foreign buyers, and we are unable to pro- 
tect our own products ? These advances afford an illustra- 
tion of another class of important operations in which the 
existing banks cannot directly participate, but which ought 
properly to be undertaken by domestic banks. 

With respect to our importations, what sufficient reason 
can be urged why the importer should have to get his credit 
from the agent of a London banker, instead of receiving it 
from an American bank through which he chose to transact 
his entire business, and which, therefore, would be the fittest 
source for procuring his credits % It cannot be to the advan- 
tage of the importer to be exposed to the vicissitudes of the 
European money markets, nor can the London banker grant 
credits to merchants 3,000 miles distant, whose position he 
imperfectly knows, without compensation for the extra risk. 
The business is, therefore, done at a disadvantage to both 
parties. The credit should be issued directly from the point 
where the importer does his business ; and this would soon 
become the fact were banks to be provided possessing spe- 
cial adaptations for doing such a business. 

Other functions proper to institutions of the character 
here suggested would be the negotiation of corporate loans, 
temporary advances to corporations, the receiving of cor- 
porate accounts, and the facilitation of corporate recon- 
struction. Banking for the larger corporations presents 
many possibilities of advantage to both banks and companies 
of which our existing banks cannot, as at present restricted, 
avail themselves. 

It is needless to say that these suggested institutions, 
whilst undertaking operations of the special character above 
indicated, should also aim to secure the best class of depos- 
its and to discount the higher class of paper. As the nation- 
al bank laws would prohibit to them the profits of circulation 
it might well merit consideration whether they should not 



586 NEW YORK AS A FINANCIAL CENTRE. 

issue to customers of high standing their own acceptances, 
within certain safe limits. These credits, yielding the cur- 
rent rate of interest, would be a highly profitable, as well as 
an entirely legitimate branch of business ; and they have the 
sanction of successful usage among the best banks of London. 
I am unable to see what objection there should be to further 
following London precedent by allowing on deposits a rate of 
interest below that current in the market for the time being. 
Such a course would attract accounts and would immensely 
increase the power and the earning resources of the banks. 
Moreover, as such institutions, being exempt from embar- 
rassing reserve restrictions and other needless limitations, 
would be less subject to the oscillations of the money mar- 
kets than are the present banks, they would afford better 
advantages to members of the Stock Exchange in the form 
of loans upon securities than they now are able to get. The 
importance of this business may be inferred from the fact 
that the yearly transactions in stocks at the Exchange have 
averaged, for the last six years, 102,000,000 shares, which, at 
an estimated average of $60 per share, represents an annual 
business of $6,120,000,000, to say nothing of the business in 
bonds, which also is very large. 

Banks of this character would naturally attract a large 
portion of the Stock Exchange houses, which experience 
has shown to be exceptionally safe and profitable. The 
single fact that these banks would not be obligated to con- 
form their loans to arbitrary 25 per cent, reserve would be 
a decisive reason for Wall Street firms doing their business 
with such institutions. 

To some extent the wants here alluded to have been met 
by our loan and trust companies. As institutions of loan 
and deposit these institutions are doing important public 
service, and the deficiencies in the functions allowed to the 
national banks are diverting to them a large and valuable 
business. The companies of this character in New York 
and Brooklyn have nearly $14,000,000 of capital and 



BUSINESS BANKS URGENTl/V NEEDED. 687 

515,000,000 of surplus and profits. Their resources aggre- 
gate 1175,000,000, and their deposits $137,000,000. Their 
rapid progress is indicated by the fact that, since 1883, their 
resourcss have increased $32,000,000, or at the rate of 27 
per cent, during three years of depression in business. But 
while this success demonstrates the great necessity for en- 
larged local banking facilities, the facilities afforded by the 
trust companies are entirely too limited to satisfy the large 
special requirements of a great financial centre above re- 
ferred to, and only add to the necessity for a class of banks 
which shall do for New York what the great joint stock 
banks and the mammoth private discount houses of London 
are doing for the business of that cosmopolitan centre. 

These suggestions are offered for what the men of Wall 
Street may deem them worth. They demonstrate that there 
is ample scope and urgent need for a new element in our 
banking arrangements to accommodate the larger operations 
of finance and commerce ; and it would not be difficult to 
prove that the country is suffering seriously from lack of 
such facilities. It will not be pretended that there is any 
lack of either the capital or the managerial talent requisite 
for such enterprise. Nor, since the rate of interest has 
come to rule as low in this country as it is in Europe, have 
we any longer anything to fear on that ground from the 
competition of foreign bankers. At any rate, if New York 
aspires to a position of financial independence and to be- 
come, in the broadest possible sense, the financial centre of 
the vast and growing exchanges of this continent and of its 
transactions with other nations, there should be no delay in 
giving this greater breadth and scope to its banking institu- 
tions. Our merchants, I am satisfied, are ready to respond to 
a movement of this character ; are the bankers and tae cap- 
italists equally prepared to provide the facilities ? 



CHAPTER LIII. 

EARTHQUAKE THEORIES AND WALL STREET AFFAIRS. 

The Shock of Every Calamity felt in Wall Street.— 
Earthquakes the only Disasters which seem to 
Defy the Power of Precaution. — Becoming a Sub- 
ject of Serious Thought for Wall Street Men and 
Business Men.— The Volcano Theory of Earth- 
quakes. — Other Causes at Work Producing these 
Terrific Upheavals.— Why Charleston was more 
Severely Shaken Up than New York. — Why the 
Southern Earthquake did not Strike Wall Street 
with Great Force.— Earthquakes Likely to Become 
the Great Disasters of the Future. 

WALL STKEET is the financial centre of this country 
as much so as London is recognized to be the 
financial centre of the world at the present time. Hence it 
is really the heart of the nation, through which its financial 
blood flows to invigorate and impart new life to every sec- 
tion of the land. Hence, also, every section and city have an 
influence on Wall Street. When the Chicago fire occurred 
it immediately created a panic. When a calamity occurs at 
any part of the country the shock is first felt in Wall Street. 
When a large failure happens, such as that of a bank or 
important railway, in any other locality, the influence is at 
once imparted to Wall Street. This is owing to the fact that 
Wall Street is the recognized and only market for securities 
of every description. All sections are dependent upon it, be- 
cause it controls the money market. It is the great con- 
necting link of the financial transactions of the whole 
country. A probable disaster through fire, like that which 
occurred at Chicago, is now no longer a terror to the Street 
or to the country, as was the case for a long time after that 
terrible calamity, for the reason that methods have been ad- 
opted for the purpose of restricting the conflagration and 



590 EARTHQUAKE THEORIES, 

confining it within narrow limits. Fires which occur now 
are soon extinguished, and it is unlikely that they can ever 
play such havoc as they have done in the past. The pos- 
sibility, with our enlarged experience, of taking precaution 
against those various calamities has robbed fires of most of 
their former terrors. Science and machinery have furnished 
us with the means of grappling with them. 

But the one great, and now very alarming exception, 
which seems to defy the power of science and every humau 
precaution, is an earthquake. This remarkable phenomenon 
has awakened great interest and inspired terror in the minds 
of the people at the present time, because the exhibition of 
its destructive powers is fresh in our memories on account 
of its terrific visitation at Charleston. Hence, many people 
are in great fear that some other section of the country 
may be stricken at any moment with a similar overwhelming 
disaster. It is the insidious and uncertain nature of the 
calamity that strikes the mind with awe. There is no pos- 
sibility of anticipating it or making the least provision to 
avoid its dreadful consequences. The Charleston earth- 
quake wiped out over ten millions of property. It came, 
like a thief in the night, and before morning the greater 
portion of the city was a mass of ruins. When we reflect 
on the extent of the destruction of property, it is marvel- 
lous how few people were killed — only about one hundred, 
and only two or three hundred were wounded. One of the 
greatest wonders why this calamity should have occurred 
in Charleston is, that part of the city has stood for nearly 
two centuries, and the recent earthquake has been the first 
it has experienced. Another curious circumstance is, that 
the disaster should have occurred on so large a scale there, 
as the locality is so far removed from the region of any 
volcano. 

This clearly demonstrates that the old " volcano" theory 
of earthquakes is thoroughly exploded, and we must seek 
for causes and the explanations in other quarters. Although 



THINKING SERIOUSLY ABOUT EARTHQUAKES. 591 

Wall street has not been governed by any known iaw of 
earthquakes, except as regards the fluctuations of the proper- 
ties in a bear market dealt in at the Exchange, yet a great 
number of Wall street habitues, as well as other business' 
men, are beginning to think seriously on the subject of 
earthquakes, and are attempting to penetrate their causes,, 
Reflecting upon the upheaval — or rather the settling 
down of Charleston — I have come to the conclusion thaf 
similar disasters may be looked for in other localities^ 
hitherto not subject to them, and considered by scientists 
absolutely free from these phenomena, at least on so large 
a scale. These peculiar disturbances that now make life so 
precarious on this planet, I attribute to the innumerable 
and so largely increasing excavations going on in various 
parts of the country, in the different mining operations, which 
displace the underpinning of the surface and cause it to sink 
beneath the weight which it carries. Of all the great min- 
ing industries which conspire to produce earthquakes, I 
think that of oil plays the most important part, and is the 
most treacherous in its operations beneath the surface of the 
earth. The pumping of oil from the bowels of the earth has 
been going on for thirty years in this country in several 
districts. I believe it is not too large an estimate to state 
that in that time an enormous lake of oil has been removed, 
that would probably fill the basin of Lake Erie or Ontario. 
That fluid made its way, probably, some of it from long dis- 
distances in subterraneous rivers before reaching the place 
where the nature of the soil permitted it to gush through a 
shaft to the surface, as it does in such abundance in the oil 
regions of Pennsylvania. Some of those undercurrents may 
have come from other States, percolating through and disin- 
tegrating the soil in their passage for hundreds of miles, 
until they found an outlet, on the principle that all fluids 
have a tendency to find their level. There may be a great 
underground reservoir of this oil, which has taken many 
years to penetrate through the earth owing to the tendency 



592 EARTHQUAKE THEORIES. 

stated, cleaving, in its subterraneous journey, iissures 
through ranges of mountains, and thus loosening the earth 
and taking away the support from the surface wherever it 
has penetrated. The fluid, percolating through various 
strata of clay and rock, has displaced these in its course. 
Owing to this displacement there must, of necessity, be a 
settling down of the land in the various regions through 
which the oil has passed, which will, of course, differ in de- 
gree owing to the density of the rock or clay. If the earth 
should be of a pulpy, soft nature the settling will be greater, 
and when it happens to be the foundation of a town or city 
the catastrophe will also be greater in inverse proportion to 
the degree of consistency of the earth. It is presumable, 
therefore, that some of the streets beneath the foundation 
of Charleston is of this pulpy, yielding character, and hence 
great was the fall of that city. 

When New York was visited by the earthquake in 1884, 
and at various other times, there was only a moderate shak- 
ing up, comparatively speaking. Why ? Because its sub- 
structure is solid stone to an immense depth, even lower 
than the depths of the ocean. Of these subterraneous rivers 
of which I have spoken we have many examples be- 
sides that of oil, and also proofs that they traverse 
great distances, as, for instance, in the case of the Sara- 
toga Springs. It is clearly demonstrated that in the 
case of these and other springs the waters must come 
from various sources, and pass through many varieties 
of minerals before they arrive at their destination, and thus 
receive the combination of elements which impart to them 
their medicinal qualities. Then there are numerous instan- 
ces of this remarkable power of water in the case of these 
monstrous land slides in mountainous regions, such as the 
Alps. In the act of attempting to find its level, too, water 
sometimes exerts its influence, in breaking up rocks, equal 
in its manifestation to a powerful explosive. Thus we see 
the great influences that are at work everywhere capable of 



WEY IT DID NOT STRIKE WAU, STREET. W6 

producing earthquakes without the necessity of resorting to 
the volcanic theory and without the aid of fire. 

In further illustration of this theory of earthquakes, let 
us suppose that one of these immense oil lakes which must 
exist in the bowels of the earth should be situated beneath 
a mountain, where it has been undisturbed for ages, but 
through some recent disturbing cause— most likely that of 
excavating, to which I have referred — it begins to find an 
outlet through various fissures. When once started, this 
great mass of fluid matter begins to go with a rush, forcing 
innumerable outlets, until the internal lake is in a measure 
exhausted. This creates an immense vacuum, which deprives 
the mountain of a large portion of its support ; hence there 
is a settling down of several inches or several feet, accord- 
ing to the nature and the solidity of the support. It is 
this process of settling down and the struggle of the large 
masses of fluid to force their way out, that create the rumbling 
noise resembling that of distant thunder, and which also 
cause the tremulous and quivering motion felt at the surface 
of the earth, and still more distinctly in the houses, 
and most distinctly of all in the upper stories thereof. 
These effects may be produced at a great distance from the 
original cause of action, varying, of course, in their 
intensity according to that distance. Several of these effects 
have been distinctly experienced in Charleston since the 
first great catastrophe, but showing that the cause is weaker 
and further removed from the scene of the disaster than it 
was during the first fearful shock. 

The Charleston earthquake did not strike Wall Street with 
very great force. The very fact of its weak effect upon the 
great financial centre of gravity created about as much sur- 
prise in the Street as the frightful shock itself did in a very 
different and opposite manner upon the people of Charleston. 
The reason that the great catastrophe which overwhelmed 
Charleston had so little effect on Wall Street was chiefly 
owing to the fact that comparatively little loss fell upon the 



594 EARTHQUAKE THEORIES. 

I 

corporations or the people connected with Wall Street 
interests. The loss of ten millions fell mainly upon the 
people of the doomed city alone. Only a small portion fell 
upon people located elsewhere either in the North or the 
South. Had such a disaster happened in any of the large 
cities North, East or West, owing to their intertwining con- 
nections with Wall Street, a panic would have been the 
result not unlike the one which followed the Chicago fire. 

Earthquakes are likely to become the great disasters of 
the future most to be dreaded. Our population now com- 
prises sixty millions, which, at the present rate of increase, 
will soon reach one hundred millions. Among these is a 
large proportion of go-ahead, driving men, who are constantly 
diving into the bowels of the earth to dig up the vast trea- 
sures which are there concealed. Through this laudable 
enterprise the underpinning of the surface of our globe is 
being constantly disturbed ; and though it is far from a con- 
soling reflection, the time may come, and may not be far 
distant, when such calamities as that of Charleston may be 
as common as railroad accidents are now. 



CHAPTEK LIY. 

AUGUST BELMONT. 

The' American Eepresentative op the Eothschilds. — 
Begins Life in the Eothscchilds' House in Frank- 
fort. — Consul General to Austria and Minister to 
the Hague.— A Great Financier and a Connoisseur 
in Art. 

AUGUST BELMONT has achieved the highest credit of 
any banker in the United States. His bills are always 
in demand and command a little more than those of any one 
else. He came to New York comparatively poor, but is now 
worth millions. As a representative of the Eothschilds in 
this country he has for many years held a high position in 
the financial world. He has managed the business of that 
historic house with prudence and exceptional acuteness and 
sagacity. Contrast his success in this country with the 
experience of Americans abroad. George Peabody, and 
J. S. Morgan, the successor of that philanthropist, may seem 
to be exceptions to the rule, but they did not win such social 
and business success as has been achieved by Mr. Belmont 
in this country, and the fact remains that no American could 
have been so successful abroad as he has been in the United 
States. Europe does not afford the opportunities that so 
often arise here. This is the country of great and frequent 
opportunities ; there is a large and inviting field for enter- 
prise and business skill, although, of course, all cannot win 
such a position in the financial world as that occupied by 
Mr. Belmont, who is reckoned among the wealthiest as well 
as the most honored of America's adopted citizens. 

He was born in the Ehenish Palatinate sixty-eight years 
ago. His father was a man in well-to-do circumstances, who 
sent him, when he was thirteen years old, to become an 
apprenticed clerk to the Eothschilds in their Frankfort 



596 AUGUST BELMONT. 

house. According to the German custom, he received no 
pay ; he was compensated by the opportunity of learning 
the banking business. He made rapid progress. Before he 
was twenty-one he was selected to accompany one of the 
Rothschilds to Italy and France as his secretary. In 1837 
the famous house, recognizing the promising field in this 
country for profitable investments, sent young Belmont to 
New York as their agent, a position which he held till 1858, 
when he became their American correspondent and general 
representative, and this responsible post he has held ever 
since. In 1844 he was appointed Consul- General for Aus- 
tria, and held the position for five years, when he relinquished 
it because of his personal friendship for Louis Kossuth and 
his sympathy with Hungary in the quarrel with Austria. 
In 1849 Mr. Belmont married the niece of Commodore Perry, 
the hero of Lake Erie, a beautiful and accomplished lady, 
who did much to strengthen his social position. In 1853 
he was appointed Minister to the Hague by President Pierce, 
and served four years. He has always been a staunch 
Democrat, and was for several years chairman of the Demo- 
cratic National Committee. He has generally refused to 
accept public office, but his eldest son, Perry, has served 
several terms in Congress. 

Mr. Belmont is under the medium height, rather stout, 
with iron-gray side whiskers, round German features and 
keen dark eyes, and among the strong characteristics of the 
man is his marked chivalric courtesy and knightly courage. 
As a financier he has few equals and no superior, and to his 
politic and conservative management, as well as his foresight 
and intimate knowledge of affairs, is due the American 
prestige and success of the Rothschilds. Mr. Belmont's 
house on Fifth Avenue, with its splendid art treasures, is 
worth a large fortune in itself. He is a connoisseur in works 
of art, and has one of the finest private collections of pic- 
tures in the world. For many years he has also had a 
princely residence at Newport and a stock farm at Babylon, 



ONE, OF THE FOUNDERS OF THE MANHATTAN CLUB. 597 

Long Island. Though not, strictly speaking, a club man, 
he was one of the founders of the Manhattan Club. His 
successful career is an illustration of the fact that this 
country affords a fine opportunity for the intelligence, thrift 
and industry not only of native Americans but a£ the 
Republic's adopted citizens. 



CHAPTEE LV. 

THE SOCIALIST OBJECTIONS TO THE PRESENT ORDER 
OF SOCIETY EXAMINED. 

Increase of Population and the Growing Pressure upon 
the Means of Subsistence.— Education and Moral 
Improvement the True Kemedy for Existing or 
Threatened Evils. — Errors of Communism and So- 
cialism. — How Socialistic Leaders and Philosophers 
Eecognize the Truth.— Growth of Population Doe& 
not Mean Poverty. 

ME. Mill says : " It is impossible to deny that the consid 
erations brought to notice in the preceding chapter make 
out a frightful case either against the existing order of society 
or against the position of man himself in this world." How 
much of the evils should be referred to the one, and how much 
to the other, is the principal theoretic question which has to 
be resolved. But the strongest case is susceptible of ex- 
aggeration ; and it will be evident to many readers, even 
from the passages I have quoted, that such exaggeration is 
not wanting in the representations of the ablest and most 
candid Socialists. Though much of their allegations is un- 
answerable, not a little is the result of errors in political 
economy ; by which, let me say once for all, I do not mean 
the rejection of any practical rules of policy which have 
been laid down by political economists— I mean ignorance 
of economic facts, and of the causes by which the economic 
phenomena of society as it is are actually determined. 

In the first place, it is unhappily true that the wages of 
ordinary labor, in all the countries of Europe, are wretched- 
ly insufficient to supply the physical and moral necessities 
of the population in any tolerable measure. But, when it is 
further alleged that even this insufficient remuneration has 
a tendency to diminish ; that there is, in the words of M. 



600 THE SOCIALIST OBJECTIONS TO PRESENT SOCIETY. 

Louis Blanc, une basse continue des salaires (a continual de- 
cline of wages) ; the assertion is in opposition to all accu- 
rate information, and to many notorious facts. It has yet 
to be proven that there is any country in the civilized world 
where the ordinary wages of labor, estimated either in 
money or in articles of consumption, are declining ; while 
in many they are, on the whole, on the increase — and an 
increase which is becoming, not slower, but more rapid. 
There are, occasionally, branches of industry which are 
being gradually superseded by something else, and in those, 
until production accommodates itself to demand, wages are 
depressed ; which is an evil, but a temporary one, and would 
admit of great alleviation even in the present system of so- 
cial economy. A diminution thus produced of the reward 
of labor in some particular employment is the effect and the 
evidence of increased remuneration, or of a new source of 
remuneration, in some other ; the total and the average re- 
muneration being undiminished, or even increased. To 
make out an appearance of diminution in the rate of wages 
in any leading branch of industry, it is always found neces- 
sary to compare some month or year of special and tempo- 
rary depression at the present time, with the average rate, 
or even some exceptionally high rate, at an earlier time. 
The vicissitudes are no doubt a great evil, but they were as 
frequent and as severe in their former periods of economical 
history as now. The greater scale of the transactions, and 
the greater number of persons involved in each fluctuation, 
may make the change appear greater, but though a large 
population affords more sufferers, the evil does not weigh 
heavier on each of them individually. There is much evi- 
dence of improvement, and none that is at all trustworthy, 
of deterioration, in the mode of living of the laboring pop- 
ulation of the countries of Europe. When there is any ap- 
pearance to the contrary it is local or partial, and can 
always be traced either to the pressure of some temporary 
calamity, or to some bad law or unwise act of government 



ANALYZING COMMUNISM. 



601 



which admits of being corrected, while the permanent causes 
all operate in the direction of improvement. 

M. Louis Blanc, therefore, while showing himself much 
more enlightend than the old school of levellers and demo- 
crats — inasmuch as he recognizes the connection between low 
wages and the over-rapid increase of population— appears 
to have fallen into the same error which was at first com- 
mitted by Malthus and his followers, that of supposing that 
because population has a greater power of increase than sub- 
sistence, its pressure upon subsistence must be always grow- 
ing more severe. The difference is that the early Malthu- 
sians thought this an irrepressible tendency, while M. Louis 
Blanc thinks that it can be repressed, but only through a sys- 
tem of Communism. It is a great point gained for truth 
when it is recognized that the tendency to over-popula- 
tion is a fact which Communism, as well as the existing 
order of society, would have to deal with. And it is en- 
couraging that this necessity is admitted by the more 
considerable chiefs of all existing schools of Socialism. 
Owen and Fourier, as well as M. Louis Blanc, admitted 
it, and claimed for their respective systems a pre-eminent 
power of dealing with this difficulty. However this may be, 
experience shows that in the existing state of society the 
pressure of population on subsistence, which is the princi- 
pal cause of low wages, though a great is not an increasing 
evil ; on the contrary, the progress of all that is called civil- 
ization has a tendency to diminish it, partly by the more 
rapid increase of the means of employing and maintaining 
labor, partly by the increased facilities opened to labor for 
transporting itself to new countries and unoccupied fields of 
employment, and partly by a general improvement in the 
intelligence and prudence of the population. This progress, 
no doubt, is slow ; but it is much that such progress should 
take place at all, while we are still only in the first stage of 
that public movement for the education of the whole people 
which, when more advanced, must add greatly to the force 



602 SOCIALIST OBJECTIONS TO PRESENT SOCIETY. 

of the two causes of improvement specified above. It is, 
of course, open to discussion what form of society has the 
greatest power of dealing successfully with the pressure of 
population on subsistence, and on this question there is 
much to be said for Socialism ; what was long thought to 
be its weakest point will, perhaps, prove to be one of its 
strongest. But it has no just claim to be considered as the 
sole means of preventing the general and growing degrad- 
ation of the mass of mankind through the peculiar tendency 
of poverty to produce over -population. Society as at 
present constituted is not descending into that abyss, but 
gradually, though slowly, rising out of it, and this improve- 
ment is likely to be progressive if bad laws do not interfere 
with it 



CHAPTER LYI. 

STOCK EXCHANGE CELEBRITIES. 

How Wall Street Bankers' Nerves are Tried.— Fine 
Humor, Jocular Dispositions, and Scholarly Taste 
of Operators. — George Gould as a Future Financial 
Power. — American Nobility Compared with European 
Aristocracy. — How the Irish can Assist to Purge 
Great Britain of her Bilious Incubus of Nobility — 
The Natural Nobility of our own Country, and 
their Destiny. 

AMONG the well-known members of the Stock Exchange 
not elsewhere mentioned are James D. Smith, who is 
now in his second term as President, and who is also Presi- 
dent of the New York and Exchange clubs and Commodore 
of the New York Yacht Club, a man of a genial nature aaid 
everyone's friend ; Brayton Ives, twice President of the Stock 
Exchange, the colonel of a cavalry regiment under General 
Sheridan in the civil war, and later a Brevet-Brigadier 
General ; a graduate of Yale, and a member of the Union 
League, Century, Athletic and University clubs ; Charles 
Johnes, the King of board room traders, once a clerk for 
Henry Clews & Co., now worth a million, and a Prince 
of good fellows, as bright and quick as he is popular ; Louis 
Bell, a daring and successful operator, a son of the well- 
known Isaac Bell, and who was at one time a clerk with 
Brown Brothers & Co., the bankers ; John Kirkner, another 
plucky operator, keen in forecasting the market, and 
tenacious of his opinions, whether contrary to generally 
accepted views or not; Eugene Bogert, Wm. B. Wadsworth, 
William Henriques and James Raymond, also successful 
traders ; John Slayback, Edward Brandon, James Mitchell, 
Vice-Chairman Alexander Henriques, ex-President J. Ed- 
ward Simmons, Secretary Geo. W. Ely, Donald Mackay, 



604 STOCK EXCHANGE CELEBRITIES. 

Thomas B. Musgrave, Frank Work, the Wormsers, E. P. 
Flower, John T. Lester, Frank Savin, Charles Schwartz and 
A. E. Bateman, are all worthy of special notice. Some of the 
foregoing have a large following, more particularly the large 
room traders, like Messrs. Johnes, Bell, Bogert, Kirkner and 
Wadsworth. There are eleven hundred members of the Stock 
Exchange, and it is seldom that a black sheep is discovered 
among them. There are some lambs, perhaps, who receive a 
spring and fall shearing, but if they have pluck the wool 
comes back again, and they push up the thorny and brambly 
path to wealth, leaving, it is true, a little fleece here and there 
in the struggle, but generally " getting there," nevertheless. 
It is, however, a mistake to suppose that all the members of 
the Stock Exchange are wealthy. They have their ups and 
downs like everybody else, and some are in very moderate 
circumstances. 

The strain on a Wall Street broker is so great, the ten- 
sion of the nerves, in one of the most trying vocations known 
in the business world, is so severe, that joking and in fact 
boyish pranks constitute a safety valve for the relief of 
brains that would otherwise become disordered. Without the 
relief of joking and skylarking, Nature's own remedy for the 
burdened mind in such circumstances — many a stock broker 
would go mad. u There is nothing so good as a laugh," 
says the song, and this expresses a profounder truth than 
is generally suspected. Charles Darwin relaxed the severe 
mental strain induced by his inquiries into occult questions 
of biological science by reading the humorous extravagances 
of Mark Twain, and the greatest thinkers, men who are far 
out on the cold frontiers of thought, seeking, as intellectual 
pioneers, the solution of the fundamental problem of exist- 
ence, are proverbially jocular in their hours of relaxation. 
Nature herself may be said to laugh, and why not overbur- 
dened business men? The pranks at Christmas on the 
Stock Exchange, the sound of hand organs in the Board 
Room, the smashing of hats, pushing and jostling, the 



PRANKS AND AMUSEMENTS OP MEMBERS. 605 

blowing of tin horns, the waltzes and lanciers, the walking 
matches, wrestling and sparring — these are only the natural 
reaction through the safety valve of humor which tend to 
relieve undue tension and keep the spirits clear and fresh. 
There is more or less skylarking on all dull days, and the 
effect is mental invigoration. It is a mistake to suppose that 
only the younger men participate in these amusements- 
The older members are the most incorrigible. "When a 
new member, for instance, is receiving his vigorous initia- 
tion and being hustled here and there like a chip in raging 
waters, his silk hat skimming along the floor, the foot ball 
of hundreds of feet, his collar at right angles with his person 
and his coat tails flying like a Dutch lugger under full sail, 
a group of older members may look on with apparent disap- 
proval, but the moment the newcomer is driven in their 
direction he finds that his last state is worse than the first- 
The veterans give him a reception that makes him look 
wilder and gasp more than ever, and he is glad to escape 
from these gray bearded evil-doers. The horse play is 
rough but it does no harm, and the new member, after buy- 
ing a new hat, is ready to " get square " on the next unfortu- 
nate wight to be initiated. 

As to the Stock Exchange as a great financial institution, 
none stands higher in the world. Its transactions involve 
hundreds of millions in a year, and nowhere is there more 
regard for strict equity in business. Its members are as 
exemplary a class of business men as can be found any- 
where. Its methods are strictly upright, and a black sheep 
finds no mercy. Wealth will not necessarily procure a 
membership in this great financial emporium. The appli- 
cant must be a person of good repute. It numbers men of 
great wealth, men of a high order of talent, men of scholarly 
tastes, connoisseurs in art, students of science, literature and 
philosophy, and men capable of standing at the helm and 
giving direction to vast enterprises in the domain of finance 
and commerce. There is not a more intelligent body of 



606 STOCK EXCHANGE CELEBRITIES. 

men in the world. The very nature of their business com- 
pels them to study great public questions, and many of the 
members are men of a distinctly statesmanlike caste of 
mind, of whom the Stock Exchange may well be proud, 
while they themselves derive no small distinction from being 
identified with so illustrious and honorable a body. 

Washington E. Connob. 

Washington E. Connor was born in New York city about 
37 years ago. He first appeared in Wall Street as a clerk 
for Wm. Belden & Co., a firm in which the redoubtable Jim 
Fisk was once a partner. Black Friday of September, 1869, 
when a financial hurricane whistled through Wall Street, 
brought young Connor to the front, and he has ever since 
remained there. He was long the able lieutenant of Mr. 
Gould in large speculations. He is a natural leader in spec- 
ulation — cool, quick and adroit. From time to time he has 
been a director in the Western Union, Union Pacific, Mis- 
souri Pacific, Missouri, Kansas & Texas, Kansas Pacific and 
Wabash Companies. He was president of the Central Con- 
struction Company, which established the lines of the 
American Union Telegraph Company. He was a director 
in the famous Credit Mobilier Company, the Texas & Col- 
orado Improvement Company, the Metropolitan and New 
York Elevated roads and the New Jersey Southern. He is 
a member of the Union League and the Lotus clubs, and 
especially enjoys the society of artists, writers and other 
persons of talent and cultivation. He has a good library, 
and is of a somewhat studious turn of mind. As a youth he 
studied at the College of the City of New York. 

A Future Financial Power. 

George J. Gould will be one of the few very rich men in 
this country, as he will, of course, be his father's successor. 
He possesses good abilities, has an attractive presence, and 



GEORGE J. GOULD'S PROBABLE FUTURE. 607 

is modest and retiring in his manners. He has, thus far, 
made an excellent record, and the Stock Exchange was glad 
to admit him to membership. He is connected with all of 
his father's roads, and is gradually relieving him of much of 
the onerous work connected therewith. If anything should 
happen to Jay Gould, George Gould would stand in the same 
financial relation to his affairs that Wm H. Vanderbilt sus- 
tained to his father, the Commodore, and, like him, would be 
found equal to the new honors and responsibilities devolv- 
ing upon him. This reasonable expectation should dispel 
any apprehension of a financial shock in the event of Jay 
Gould's demise. 

George Gould is bright and agreeable, and a good hus- 
band. If Jay Gould has made enemies, that is no reason 
why his son should not be popular. It is proverbial 
that the male descendants of a family are more akin to 
the side of the mother than to that of the father, and as 
Mrs. Jay Gould has always been recognized as a most 
exemplary wife and mother, she may rightfully be regarded 
as the equal of any woman in New York, and one to be re- 
spected and honored accordingly by those whom we ought 
to take as social exemplars. There should be no other 
standard of social test than that of merit ; not judging indi- 
viduals by what they were, but by what they are to-day ; not 
judging by the ridiculous test of ancestry — a criterion which 
would upset some of our social demigods— but by the real 
worth of the living man or woman. Suppose, for instance, 
the young Vanderbilts, who rank high in society, and are 
splendid specimens of nature's noblemen, should be meas- 
ured by the standard of the old Commodore when he was a 
boatman on Staten Island. Everybody would recognize 
such a test of fitness as to the last degree absurd. In the 
United States nature's nobility is at the front, as against the 
parchment nobility of England and the Continent. The 
personelle of the English nobility makes a sorry showing 
beside that of young George Gould, the young Vanderbilts, 
and others of our wealthy Americans. 



603 STOCK EXCHANGE CELEBRITIES. 

The modern nobility spring from success in business. 
Peace has its victories in the formation of character greater 
than those of war; and peace and republicanism will 
develop the future greatness of the human family, and not 
pretentious yet effete monarchies, of which mankind is 
heartily sick. Many of the so-called noblemen of to-day 
shine only by a faint reflected glimmer from the armor of 
mediaeval ancestors ; or their ancestry may be much more 
recent, and steal slyly off in the gloom of forgotten crimes 
to the prison or the gallows ; or their patent of nobility 
may be a thing of yesterday, a child's bauble solemnly dis- 
played by addle- pated dotards, ridiculous even to the un- 
thinking. The English nobility is coming to the auction 
block. Not a few in former times laid their heads there 
for treason, but now it is articles of more value, namely, the 
curious, the antiquities, the bric-a-brac, the works of art, 
the rare furniture, which comes to the block, and they are 
purchased by the new nobility raised up by success in 
finance and commerce. There is very little in Europe which 
is not obtainable at a price. Titles in England may yet be 
sold as they have been in Italy. Who cares for a title of 
Italian or French nobility ? To this low estate must Eng- 
lish titles come at last. It is marvellous that they have 
endured so many centuries after the downfall of the feudal 
system that originally gave them birth. 

Why is it that Gladstone has always refused a title ? 

One reason is that at his birth nature gave him a higher 
title to nobility than parchment can ever confer. 

Another is that he did not care to be ennobled and then 
wrapped, as a titled mummy, in the sweet-scented cerements 
of political death, to be buried in that Egyptian tomb of 
political extinction, the House of Lords. And to-day he is 
a Colossus among statesmen, whose grand figure will loom 
up in history as one of the foremost men of the nineteenth 
century, a Titan dwarfing the proudest of a senile nobility, 
And yet he is simply a great Commoner. 



THE BIUOUS NOBIUTY OF ENGLAND. 609 

If the Irish wish to assist nature in purging Great Britain 
of her bilious incumbus of nobility, they should recognize 
the fact that ridicule is a good medicine. The Irish are 
proverbially prolific. Let them make a point of christen- 
ing the rising generation with titled names. Then there 
would be myriads bearing the name of Duke O'Beilly, Earl 
McCarty, Marquis O'Brien, Baron Sullivan, Sir Timothy 
Finnegan, Lord McSwynny, and so on. The objection to 
this plan, however, is that it would brand thousands of in- 
nocent and helpless children of worthy parents with titles 
which have become contemptible to all right-thinking per- 
sons as the badges of imbecility, mediocrity, or dishonor. 
This is a rather lengthy digression after beginning with 
one of the natural nobility which we have in this country, 
namely, the nobility founded solely on merit, but the case 
of a young man like George Gould naturally suggests con- 
trasts. He is destined to take a commanding position in 
the world of finance in future years, and it is gratifying to 
know that he is a man of high character, excellent capacity, 
and of great promise. There is usually a disposition to 
criticise the sons of very wealthy men, due to that envy to 
which poor human nature is so prone, but the fact in this 
case is indisputable that young Gould is held in high esteem 
wherever he is known. He is a graduate of Harvard and 
Columbia, and a member of the Manhattan and other clubs, 
and he is, in the business world, where he is most powerful, 
simply a reserved and quiet associate, always controlling 
his lines, but never interfering in a strident way with those 
who are working for them. 



CHAPTEE LVII. 

A LOOK INTO THE FUTURE. 

What we are — What we are Preparing for — What we 
are Destined to do and to Become — We are Enter- 
ing on an Era op Seeming Impossibilities — Yet the 
Inconceivable will be Eealized. 

IN reviewing the past, I am struck with the enormous 
growth of New York as a city, New York as a State, 
and the United States as a Nation. The fact is that we 
hustle through the business world so fast (and this is espe- 
cially applicable to Wall Street), that we do not realize how 
rapidly we are going. To any one who is familiar with the 
appearance of the down town or business part of the city, 
as it was twenty years ago, ten years ago, or even eight 
years ago, the difference to-day will give some intimation of 
the changes which are going on around us, and are merely 
features of development. Why, even ten years ago, the old 
Equitable Building was a structure to which attention was t 
attracted because of its greatness and its superiority over, 
any other building in New York city — its height, its width, 
its breadth, its depth, its elevators, its beauty of arrange- 
ment inside and its artistic aspect outside. Millions of dol- 
lars have been spent in the past few months in making this 
one building about four times as large as the original struc- 
ture which brought pride to the hearts of New Yorkers, and 
surprised and startled their friends from the country. 
To-day it is one of the greatest buildings on the Island, and 
even rivals the State Capitol, which is supposed to be the 
pride of the people of the Empire State. This is only one 
instance. All along lower Broadway, the great business 
artery of the country, four-story and five-story buildings 



612 A I,0OK INTO THE FUTURE. 

have been torn down, and nine-story buildings put up in 
their place. Four and five buildings have been dug away 
and a single structure put up in their place, and in some of 
the buildings — indeed in scores of them — within a few 
blocks of the Stock Exchange, there are whole communities 
of people who are performing life's work in their own good 
way, rather than interfering with their neighbors or them- 
selves, and who know nothing of what goes on around and 
about them, and care less. Small armies of retainers and 
servants, and the most perfect mechanism, are needed to en- 
able these communities to carry on their work with dispatch 
and convenience. That is to say, where offices are rented in 
the eighth and ninth stories of a building, the occupants 
expect to be shot up to them, and down from them, with no 
trouble to themselves, and no weariness of limbs — and they 
are. This must be done, too, without loss of time— and it is. 
All the attendant arrangements must have the elements of 
luxuriousness and comfort — and they do. 

This is a small feature of our development, however. So 
far as the development of the city is concerned, this appears 
to be an era of bridges, and Rapid Transit Elevated roads* 
So far as the development of inter-State communication is 
concerned this is an era of Express Trains, which, although 
they have reached a speed of a mile a minute in certain 
perfected sections of the troads, do not at all indicate what 
will come to pass in the future. Electricity is, of course, 
the means for instantaneous communication between 
separate points known to human intelligence, prac- 
tically annihilating time between the New World 
and the Old World, and between separated points in 
either world, or even in the cities. But electricity does 
not travel with anything like the speed of light and 
air. Now, in some few instances, we have utilized com- 
pressed air as a means of locomotion. Efforts are being 
made, but are still in a crude state of development, for the 
utilization of electricity as a motive power. Suppose we 



PNEUMATIC TUBES SUPERCEDE STEAM. 61^ 

look one hundred years ahead, and, calculating upon the 
factors and experiences of the past one hundred years, 
imagine what the picture will be of this town as a city, 
and this people as a nation. I believe that one hundred 
years hence the era of bridges between this city and those 
which adjoin it across the rivers, will have passed away, and 
that instead of one or two or five bridges across the East 
Eiver, we will have pneumatic tubes at every pier, and I 
believe the same will be true on either side and at the end of 
the island. These tubes will spread from New York, as the 
blood vessels in the human body spread out and are supplied 
from the heart ; for New York is not only the business heart 
of this country, but it is destined to be, so surely as God per- 
mits growth, the business heart of the world, and the money 
centre of the world. And the arteries from this centre will dis. 
tribute the blood all over, and in all directions. Through 
these pneumatic tubes I believe there will be almost instan- 
taneous communication or transportation of people from one 
point to another. Nor will this be confined to New York 
city alone, In the near future the Trunk Line Eailroad to 
leading points, such as Washington, Philadelphia, Boston 
and Chicago, will probably run trains at the rate of one hun- 
dred miles an hour, and even this will only be a beginning. 
To admit of this, steel rails will be required of about 
double their present weight, and the wheels must be pro- 
portionately massive and strong. The risk attendant upon 
such increased speed will be no greater than the ordinary 
speed of the present day, say forty miles an hour. But the 
time will come, during the next five generations, when the 
pneumatic tubes will extend from here to these central points 
of the East and the West and the South; and it will be possi. 
ble for a man to leave New York at seven o'clock and go to 
Chicago for breakfast, transact his ' business and return to 
New York for lunch or business appointment by twelve 
o'clock noon of the same day. Of course, one of the prob- 
lems to be solved in connection with this sort of meteoric 



614 A. IPOK INTO TH^ FUTURE. 

speed will be to supply air for breathing purposes; and the 
same compressed air which will shoot the carriage through 
the tube, will be in some form utilized for the purpose. 
This, however, only for a period ; for I think the time must 
come when electricity will be the one motive power of this 
country and of the world, so far as the transportation of peo- 
ple and property is concerned. Time is money, and the 
American idea is to save time. We now waste little enough 
of it in all conscience. The greatest business of the world, 
that of the New York Stock Exchange, is already compressed 
into five hours' time ; and yet it is a business in which the 
most trivial error or accident because of haste might 
cause losses of millions. The obliteration of time is a 
necessity of American enterprise. When Electricity is 
made the general propelling power, it is likely that a sta- 
tionary engine will be located at Niagara Falls, and the 
force and power of those waters utilized to supply all the 
needed propelling power for this State, if not even beyond, 
to remote and far-off sections of our country. I 
heard it once said by an intelligent authority, that 
it had been predicted that instead of the coal mines of this 
country sending their products hundreds and thousands of 
miles away, for transportation-power, at a great expense, 
that a stationary engine would be located at the mouth of 
the mine, and the power derived from the coal transmitted 
therefrom over an electric wire. This would, indeed, be a 
great transformation, and a great improvement and a great 
economy. But a greater change, one quite as likely in 
the future, and perhaps possible within the life-time of 
some of our children, will be the abolition of railroads by 
the pneumatic tube process, and the transmission of power 
as I have suggested. 

A hundred years hence the people who then occupy our 
places will look upon us as primitive and crude, or, in 
accordance with the Darwinian theory, as the monkeys from 
which their perfected race has been developed. In fact, 



THE FUTURE GIANTS OF ENTERPRISE. 615 

there is a good deal of Darwinism in our development, in a 
business sense, if not in a human sense. As the surround- 
ings grow, so does the intellect of the human race, and there 
is no telling what we may do or what we may become — pro- 
vided we live long enough. We have plenty of room, plenty 
of power, plenty of natural ability, and we make our own 
opportunities ; all we lack in this world is time and perfect 
science, and if time is given us we may be able to show what 
giants of enterprise a free people may become ; that, as the 
first choice of God's creation, we lack nothing. 

We are proud now of our Brooklyn Bridge. But when 
the Bridge was opened, and the foot passenger rate was 
made one cent per person, and the car rates three cents, it 
was a grave question of consideration for the men upon 
whom devolved the responsibility of the conduct of the 
Bridge, whether or not the cities would supply passengers 
enough to make the Bridge self-supporting. It was not 
expected that they could or would. But to-day, the rate for 
foot passengers is one-fifth of one cent, and the car passen- 
gers are transported for two and one-half cents. The time 
is not far distant when these rates will be made much less, 
if not abolished entirely. They certainly will be abolished 
so [far as the promenade is concerned ; and, at the rate of 
one cent per passenger now, the Bridge would earn divi- 
dends for each of the two cities which issued bonds for its 
construction ; while the taxable value of the property in 
both has been so largely enhanced, that the Bridge has paid 
for itself already, and [jet it has been open less than ixve 
years. More than a year ago the experience of the Direc- 
tors was that the facilities of this Bridge were perfectly 
inadequate; and, while everything has been done to increase 
them and extensions and improvements have been made, 
the Bridge is still too slow, and its power facilities too 
limited for the proper accommodation of the people who 
cross it from city to city. 

This is only one evidence of the growth of New York ; it 



616 A I,OOK INTO THE FUTURE. 

is merely an incident. There is another incident, which, in 
connection with what I have said about the difference in 
construction of buildings during the past few years, I think 
I will mention right here. The city of New York donated 
to the Government the site in the City Hall Park where the 
New York post-office now stands. It iwas the original in- 
tention that the building should be only three stories in 
height. The capping was already on, and the roof was in 
the primitive stages of construction, when, walking down 
Broadway one morning, as I passed the structure, the 
thought occurred to me that, for a building of its size and 
heavy granite exterior, its height was disproportionate, and 
gave it a dwarfed appearance, and a lack of symmetry. Be- 
sides that, whatever space could be added to it by the increase 
in its height, even though the additional room might be a 
surplus for the time being, the time would soon come when 
even more would be needed. I wrote to Architect Mullet, 
calling his attention to these facts, and insisting that, in 
confining the building to three stories, he was making a mis- 
take ; that it was not in keeping with the magnificence of 
the structure ; that it should have one or more additional 
stories, with a mansard addition besides, and that the busi- 
ness experience of the past most certainly demonstrated 
that the room would soon be needed by the Government for 
the proper conduct of its affairs in this the greatest business 
center of the country. Within a week Mr. Mullet called to see 
me, and I convinced him that I was correct in my criticism 
and predictions. He said, in reply : " But there is no ap- 
propriation ; the money appropriated is exhausted, and the 
building cannot be enlarged." I asked him : " Well, what 
is necessary to be done in the matter ? Suppose I write to 
Mr. Boutwell, the Secretary of the Treasury, about it, and 
urge that the building be enlarged as I suggest." Mr. Mullet 
approved of the suggestion, and I added : " I will write to 
several members of Congress to the same effect." This I 
did, and it was not long afterward that Mr. Mullet informed 



EVIDENCE OF GROWTH. 617 

me that my efforts in the matter had been successful, and he 
had received orders to go ahead and make the building four 
stories in height, with a mansard roof story besides. This 
additional room was not needed at the time, but it has al- 
ready become inadequate for the accommodation of the Gov- 
ernment postal employees, and a few others who have been 
granted quarters there. And now there is a proposition 
under consideration for the construction of an additional 
Government building in this city which will cover two 
blocks of ground or more, and in which may be centered 
the various departments of Government, which are now 
scattered in a half dozen or more places. Is not this evi- 
dence of growth? Is not this evidence of development 
which justifies what has been said as to our prospective 
growth ? Yet this is merely incidental to the strides of pro- 
gress going on ; and, if we are walking at this pace, will not 
our children's children be racing at the different paces sug- 
gested by some of the predictions I have made ? 



CHAPTEK LVIII. 

JAY GOULD. 

His Birth and Early Education.— Clerk in a Country 
Store. — He Invents a Mouse Trap. — Becomes a Civil 
Engineer and Surveys Delaware County. — Writes a 
Book and Sells It.— Gets a Partnership in a Penn- 
sylvania Tannery and Soon Buys his Partner Out — 
He Comes to New York to Sell his Leather, Falls 
in Love with a Leather Merchant's Daughter and 
Marries her. — Settles in the Metropolis and Begins 
to Deal in Eailroads. — Buys a Bankrupt Boad from 
his Father- in-L aw, Keorganizes it and Sells it at a 
Considerable Profit. — Henceforth he Makes his 
Money Dealing in Eailroads.— His Method of Buy- 
ing, Eeorganizing and Selling Out at a Large 
Profit. — How he Managed Erie in Connection with 
Fisk and Drew. — His Operations on Black Friday. — 
Checkmated by Commodore Vanderbilt and Obliged 
to Settle. — He Makes Millions out of Wabash and 
Kansas & Texas.— His Venture in Union Pacific. — 
His Construction Companies.— Organization of Amer- 
ican Union Telegraph, and His Method of Absorbing 
and Getting Control of Western Union. — The Strike 
of the Telegraphers and his Great Encounter with 
the Knights of Labor and Trades Unionists.— 
Gould's First Yachting Expedition.— An Exceed- 
ingly Humorous Story of his Early Experience on 
the Water. — His Status as a Factor in Eailroad 
Management. — His Acquisition of Baltimore & Ohio 
Telegraph, &c. 

IF Fenimore Cooper, Sir Walter Scott, Charles Dickens or 
Dumas, in the height of the popularity of any of these 
great writers of fiction, had evolved from his inner conscious- 
ness a Jay Gould as the hero of a novel, its readers would have 
found serious fault with the author for attempting to trans- 
cend the rational probability allowed to the latitude of fic- 
tion. Few novel readers, in fact, would have patiently sub- 
mitted to such a strain on their credulity prior to the era in 



620 JAY GOULD. 

the financial development of this country which produced 
some of the leading characters which Wall Street has brought 
to the front, as stern realities of every day life, since my 
advent in the great arena of speculation. 

Among these Jay Gould is conspicuous, and of all the 
self-made men of Wall Street he had probably the most 
difficulty in making the first thousand dollars of the amaz- 
ing pile which he now controls. 

Jay Gould was born at Stratton Falls, Delaware county, 
New York, about the year 1836. He was the son of John 
B. Gould, a farmer, who kept a grocery store. At the 
age of sixteen young Gould became a clerk in a variety store 
belonging to Squire Burnham, about two miles from the 
Falls. Here, in his leisure hours, he assiduously improved 
the little learning he had received at the village school, by 
applying himself to the study of book-keeping in the even- 
ings. 

It was when he was at this store, according to the most 
reliable accounts, that he manifested his natural aptitude 
for making sharp and profitable bargains. His employer, the 
Squire, had his eye on a piece of land in Albany, which he 
expected to obtain cheap and so make a profit. He 
whispered his intention to some friend in the store and his 
young assistant overheard him. When he went to put his 
design of purchasing the land in execution he found that 
young Mr. Gould had been there before him, and had secured 
the title. 

About this time there was a firm which had undertaken to 
survey the county and make office maps of it, and young 
Gould was employed to assist them. Having mastered the 
elementary principles of geometry, and being naturally quick 
and correct at figures, he soon became a fair expert in com- 
mon land surveying, and made himself exceedingly useful 
to his employers. But the idea of not only being his own 
boss but an employer of other people's brains and muscles 
was one of his ruling propensities, and he used every effort 



THE RUUNG PASSION OF HIS UFE. 621 

to attain this object. In a short time he bought out the 
firm, wrote a history of the county to accompany the maps 
and peddled his book among the residents. 

This natural inclination to buy out every concern with 
which he has been connected has been the ruling passion of 
his life, and still tenaciously adheres to him. Prior to his 
negotiations with the firm of surveyors, he had invented a 
mouse trap in his intervals of leisure in the store, and with 
the proceeds of this and the bargain in the land, out of 
which he had outwitted his employer, he was enabled to 
make himself master of the situation with the surveyors. 
Shortly after this Gould became interested in a Pennsyl- 
vania tannery with Zadoc Pratt, who was the capitalist. 
Through the advice of Israel Corse, the Commission Mer- 
chant of the firm, Col. Pratt proposed to dissolve the part- 
nership. Gould induced Charles M. Leupp & Co. to purchase 
Pratt's interest for $150,000. The business did not meet the 
expectations of Leupp, who in a fit of despondency commit- 
ted suicide. After his death Gould failed to retain posses- 
sion of the property, which was sold to H. D. H. Snyder, 
thus terminating Mr. Gould's career as a Pennsylvania tanner. 

On his visits to New York Mr. Gould was attracted by the 
greater advantages which the Empire City afforded for ex- 
tending his business, and came here to reside. He had in- 
gratiated himself in the favorable esteem of one of the grocery 
merchants with whom he had done business. The merchant 
took him to his house to board and Mr. Gould fell in love 
with his handsome daughter. It was a mutual affair of the 
heart, like that of his son George and Miss Edith Kingdon, 
and a speedy marriage was the result. The results of the 
happy union seem to have been all that could be desired, 
and the domestic felicity of Mr. and Mrs. Gould, so far as 
the public have been able to ascertain, has never suffered 
the slighest jar or interruption. 

The father-in-law owned shares in a railroad which was in 
a bad financial condition. He employed his new son-in-law 
to see what he could do to extricate him from a position in 



622 JAY GOUUJ. 

which he was likely to become embarrassed, and he wanted 
to sell his shares. Mr. Gould examined the road, (with the 
locality of which he had been well acquainted in his boy- 
hood,) saw the favorable possibilities of its future, under 
good management, and instead of selling his father-in-law's 
shares to a stranger, he took them at their market value him- 
self, purchased more, finally obtained control of the entire 
property, and sold it to a rival company at a large profit. 

This, I believe, was Mr. Gould's first transaction in rail- 
road matters, and from that day to this his great speculative 
forte has been buying and selling railroads. It was in that 
kind of business, and not in the stock market, as is popularly 
supposed, that he made the great bulk of his enormous for- 
tune. 

On his entrance to Wall Street he began business alone. 
Afterwards he formed a partnership with Henry N. Smith 

and Martin, the firm taking the name of Smith, 

Gould & Martin. Martin is now in a lunatic asylum, and 
Henry N. Smith, who was the chief cause of the failure of 
Wm. Heath & Co. for a million dollars, is now a poor pen- 
sioner on the bounty of his wife. But Mr. Gould still 
towers aloft, in the full enjoyment and the continued pro- 
gress of his speculative prosperity, without being dis- 
mayed by any competitor, however powerful, and over- 
coming all obstacles, no matter how gigantic. 

As I have noticed pretty fully some of Mr. Gould's greatest 
speculative transactions, mostly behind the scenes in the 
chapter on Black Friday and also in the account of the 
" Commodore's Corners," it will be unnecessary to repeat 
them here. 

There was one clever transaction in the Black Friday 
affair that should be put on record to the credit of the able 
management of that great deal. One prominent individual 
connected therewith was personally responsible for $4,500,- 
000. This was a pretty heavy load at that time even for 
him to carry, but it did not weigh very heavily upon 



PLAYING POSSUM TO FRIGHTEN HIM. 623 

him for any appreciable length of time. He adroitly 
managed to shift it over on to the shoulders of that broad- 
backed, soulless creature called the Erie Corporation, mak- 
ing it responsible by simply signing himself " T. E," instead 
of " J. G.," the large letters representing the ordinary con- 
traction u Tr." for Treasurer. By this simple and ingenious 
device this shrewd gentleman got rid of the burthensome 
legacy on the negative side, bequeathed to him by the 
" Black Friday corner." 

There is a story told, with several variations, in regard to 
a sensational interview between Mr. Gould and Commodore 
Vanderbilt. The scene is laid in the parlor of the Commo- 
dore's house. It was about the time that the latter was 
making desperate efforts to get a corner in Erie, and at that 
particular juncture when, having been defeated in his pur- 
pose by the astute policy of the able triumvirate of Erie — 
Gould, Fisk and Drew — he had applied to the courts as a 
last resort to get even with them. 

They had used the Erie paper mill to the best advantage, 
in turning out new securities of Erie to supply the Vander- 
bilt brokers, who vainly imagined that they were getting a 
corner in the inexhaustible stock. Mr. Vanderbilt was wild 
when he discovered the ruse and had no remedy but law 
against the perpetrators of this costly prank. These adroit 
financiers usually placed the law at defiance, or used it to 
their own advantage, but this time they were so badly caught 
in their own net that they had to fly from the State and take 
refuge at Taylor's Hotel in Jersey City. 

It seems that during their temporary exile beyond the 
State Gould sought a private interview one night with the 
Commodore, in the hope of bringing about conciliatory 
measures. 

The Commodore conversed freely for some time, but in 
the midst of his conversation he seemed to be suddenly 
seized with a fainting spell, and rolled from his seat unto the 
carpet, where he lay motionless and apparently breathless. 



624 JAY GOULD. 

Mr. Gould's first impulse was to go to the door and sum- 
mon aid, but lie found it locked and no key in it. This in- 
creased his alarm and he became greatly agitated. He 
shook the prostrate form of the Commodore, but the latter 
was limp and motionless. Once there was a heavy sigh and 
a half suffocated breathing, as if it were the last act of respi- 
ration. Immediately afterward the Commodore was still 
and remained in this condition for nearly half an hour. 
Doubtless this was one of the most anxious half hours that 
ever Mr. Gould has experienced. 

If I were permitted to indulge in the latitude of the ordi- 
nary story teller, I might here draw a harassing picture of 
Mr. Gould's internal emotions, gloomy prospects in a crimi- 
nal court and dark forebodings. His prolific brain would 
naturally be racked to find a plausible explanation in the 
event of the Commodore's death, which had occurred while 
they were the sole occupants of the room ; and at that time, 
in the eyes of the public, they were bitter enemies. 

I can imagine that, in the height of his anxiety, he would 
have been ready to make very easy terms with his great 
rival, on condition of being relieved from his perilous posi- 
tion. It would have been a great opportunity, if such had 
been possible, for a third party to have come in as a physi- 
cian, pronouncing it a case of heart disease. No doubt Mr. 
Gould would have been willing to pay an enormous fee to 
be relieved of such an oppressive suspicion. 

The object of the Commodore's feint was evidently to try 
the courage and soften the heart of Mr. Gould, who never 
seemed to suspect that it was a mere hoax. His presence 
of mind, however, was equal to the occasion, as he bore the 
ordeal with fortitude until the practical joker was pleased 
to assume his normal condition and usual vivacity. If Mr. 
Gould had been a man of common excitability he might 
have acted very foolishly under these trying circumstances, 
and this doubtless would have pleased his tormentor in- 
tensely. 



HIS ASTUTE) RAILROAD MANAGEMENT. 625 

The modus operandi of Mr. Gould, in the purchase and 
sale of railroads, has been to buy up two or more bad roads, 
put them together, give the united roads a new name, call it 
a good, prosperous line, with immense prospects in the imme- 
diate future, get a great number of people to believe all 
this, then make large issues of bonds and sell them at a 
good price, for the purpose of further improving and en- 
hancing the value of the property. After these prelimina- 
ries had been gone through, if profitable purchasers came 
along, they could have the road at a price that would amply 
compensate Mr. Gould for all his labor and acute manage- 
ment. If these purchasers should be unable to run the road 
profitably and were obliged to go into liquidation after a year 
or two, as frequently happens, then Mr. Gould or his agents 
would very likely be found on hand at the sale to take back 
the road at a greatly reduced price. Mr. Gould would then 
get a fresh opportunity of showing the superiority of his 
management. He would be able to demonstrate that the 
road had left his possession in excellent and progressive 
condition, but through loose management had been run 
down. He would then set about the work of reorganzition 
again and go through the same role substantially, with slight 
variations, as before, realizing a handsome profit on each 
successive reorganization. 

It would take too much time, and swell this volume far 
beyond the space which I have laid out for it, to go minutely 
into the history of all Mr. Gould's great enterprises. In 
fact, it would take a large volume in itself to do justice to 
the various schemes which have been put under way by him 
directly and indirectly and carried to a successful issue dur- 
ing his busy life of a quarter of a century in Wall Street. 
This seems a long time for a man who is still so young, 
although he is a grandfather, and enjoying the use of his 
mental faculties more vigorously than ever. 

Owing to my own busy life I have only time to sketch the 
most salient points of Mr. Gould's prosperous career. Some 



626 Jay gouu). 

future historian of Wall Street is destined to make a big 
" spread " upon him, as the newspaper reporter would say. 
He will have ample material if he only begins his work soon ; 
but whoever undertakes the job should not forget the maxim 
of that great veteran of literature, old Dr. Samuel John- 
son, about material for biography having a general tendency 
to become scarce, and, in some instances, eventually to 
vanish. While the reliable material for Mr. Gould's bio- 
graphy may be subject to the common fate of growing less, 
as time advances, there is no danger of utter oblivion in his 
case. He has impressed his footprints on the sands of 
time too firmly for that. 

I don't for a moment mean to insinuate the reason for this, 
which is given by Shakespeare as applicable to similar cases, 
although some ill-natured and envious people might use the 
well-known quotation in this connection : 

** The evil that men do lives after them, 
The good is often interred with their bones." 

I have no hesitation in saying that Mr. Gould will leave 
a large amount of good after him, and, indeed, it seems now 
as if the Shakespearian adage was to be reversed in his 
case. The evil that he may have done is likely to be for- 
gotten. He bids fair to outlive most of it, if he only goes 
on to the end as he has been doing for the past few years. 
He is aow showing a decided disposition to become more of 
a builder up than a wrecker of values. 

Through his great executive ability in railroad manage- 
ment and construction he has been instrumental in making 
many blades of grass grow where none had grown before, 
causing the desert to blossom like the rose, assisting thous- 
ands who had formerly been poor and almost destitute, 
pent up either in European hovels or New York tenement 
houses, to find happy homes in the West and South. He 
has been a great factor in improving the value of the land, 
and thus, while he was enriching himself, adding materially 



HIS WICKED PARTNERS TO BI<AME. 627 

to the wealth and prestige of the nation and thereby elevat- 
ing it in the appreciation of the world at large. 

The correspondent of the London Times recently sent 
over here to write up a description of the country, dwells 
emphatically on this characteristic of Mr. Gould and other 
great millionaires and railroad magnates, who contribute so 
largely to the general prosperity of which they seem to be 
the indispensable mediums. 

It was as the managing power in the Erie Eailroad that 
Mr. Gould laid the broad foundation of his fortune. His 
speculative connections with Erie are more fully dealt with 
in the lives of Daniel Drew and Commodore Yanderbilt. 
The money and influence which he gained, in connection 
with the Erie corporation, enabled him to extend his opera- 
tions in the acquisition of railroad property until, through 
Union Pacific and its various connections, Wabash and a 
number of Southwestern roads, it seemed probable, at one 
time, that he was in a fair way of grasping the entire control 
of the trans-continental business in railroad matters. And 
this was prior to the time when he obtained his present hold 
on telegraph facilities. 

Some of the able schemes in which Mr. Gould has had 
credit for playing an important part, and sometimes a role 
that was considered rather reprehensible, were managed, so 
far as the outside business was concerned, chiefly by one or 
more of his wicked partners. In one of the most note- 
worthy of those projects, namely, the attempt to capture the 
Albany & Susquehanna Eailroad, Mr. Gould seldom or never 
appeared in person before the public. His partner, James 
Fisk, Jr., was cast in that role and played it with great 
ability. With the essential aid of those two shining lights 
of the New York bar, David Dudley Field and Thomas G. 
Shearman, the Prince of Erie, (as Jim Fisk was called,) came 
pretty near snatching possession of 142 miles of a very im- 
portant railroad, with the control of only 6,500 out of 30,000 
shares of the stock, and 3,000 shares of these 6,500 had been 
illegally obtained, as was eventually decreed by the court. 



628 JAY GOUI,D. 

Mr. Fisk, though the silent member of the Erie firm, had 
also control of Judge Barnard, of the Supreme Court of the 
City and County of New York. 

The Albany & Susquehanna road would have been a 
valuable prize for Erie. It runs from the eastern extremity 
of the New York Central at Albauy to a junction with Erie 
at Binghamton. At that time Erie aspired to be a successful 
competitor with Central for New England business, and had 
determined to monopolize the coal trade between that sec- 
tion and Pennsylvania. This connecting link of 142 miles 
was therefore regarded as a very valuable acquisition by 
both the large roads. Hence it was worth a desperate effort, 
and Jim Fisk showed that he had a true appreciation of its 
value, for he organized a company of New York roughs, 
placed himself at their head, and being armed with bludg- 
eons and pistols and an injunction from Judge Barnard, 
obtained from him in New York city — while he was really 
in Poughkeepsie at the time — went to Albany and took 
forcible possession of the offices of the railroad. He had 
the President, Secretary, counsel and receiver of the road 
arrested and put under $25,000 bonds each. Mr. Fisk went 
through the farce of an election of Erie candidates for the 
offices which he had forcibly made vacant in the Albany & 
Susquehanna, bringing his roughs up to vote as stock- 
holders. 

The President of the road, Mr. Joseph H. Bamsey, fought 
stoutly for his rights and ousted the intruders. He had 
spent eighteen years building the road, and was naturally 
attached to it. He also found a Judge to aid him. Justice 
E. Darwin Smith, of Bochester, eventually rendered a deci- 
sion in favor of the Bamsey party, with the opinion that 
" Mr. Fisk's attempt to carry the election by his contingent 
of ' toughs ' was a gross perversion and abuse of the right 
to vote by proxy, tending to convert corporation meetings 
into places of disorder, lawlessness and riot." Costs were 
decreed to the Bamsey directors, and a reference made to 



the art of getting other people s property. 



629 



ex- Judge Samuel L. Selden, of the Court of Appeals, who 
fixed the allowance to be paid by the Fisk board to the Kam- 
sey board at $92,000. It is worthy of note that the Fisk 
board consisted of the unlucky number of thirteen. 

The Erie party appealed, but long before the appeal could 
be heard the Albany & Susquehanna was leased in perpe- 
tuity to the Delaware & Hudson Canal Company, against 
whom the Erie party was not strong enough to go to law. 
Thus ended the struggle for this great connecting link. 

It is worthy of remark that this was one of the few cases 
in which, where Mr. Gould made up his mind to obtain the 
control, possession or ownership of property, he did not 
succeed. 

The methods of acquiring the control and the possession 
of other people's property have been raised to the dignity 
of a fine art by Mr. Gould. This art has been prosecuted, 
too, through " legitimate n means. He has had the law at his 
back every time, and been supported in his marvellous acqui- 
tions by the highest Court authority. 

The manner in which he managed to get Western Union 
into his hands affords a very striking illustration of his 
methods and the great secret of his success. 

When first laying his schemes to obtain the control of 
the telegraph property he got up a construction company to 
build a telegraph line. This was a company of exceedingly 
modest pretensions. It had a capital of only $5,0C0. It 
built the lines of the Western Union Telegraph Company, 
with which Mr. Gould paralleled most of the important lines 
of Western Union, and cut the rates until the older and larger 
corporation found that its profits were being reduced towards 
the vanishing point. Then it was glad to make terms with its 
competitor; a union of interests was the result, and Mr. 
Gould obtained control of the united concern. 

li Impossible," said Norvin Green, in high dudgeon, when 
the insidious intentions of Mr. Gould were broached to him 
a few months before the settlement took place. u It would 



63U JAY GOULD. 

bankrupt Gould and all his connections to parallel our lines, 
and to talk of harmony between him and us is the wildest 
kind of speculation." The genial Doctor was then master 
of the situation in Western Union, or imagined himself so 
at that time, and regarded with contempt the efforts of 
Gould and his colleagues to bring the company to terms. 
In a few months afterward the Doctor tamely submitted to 
play second fiddle to the little man whom he had formerly 
despised. 

The arrangement in reference to the cable companies fol- 
lowed the capture of Western Union. The struggle is still 
pending for the entire monopoly in the cable business, and 
it now seems only a question of time when the Bennett- 
Mackay party will have to succumb, leaving Gould in the 
supreme control of the news of the world. If this should 
happen he would become an immense power for either good 
or evil both in speculation and politics. In fact it would 
be too great a monopoly to be entrusted to the will of one 
man. Although it might be judiciously managed, as the 
cup of his ambition would then be surely full, yet the exper- 
iment would be extremely hazardous. 

The controlling interest in the Elevated Railroads of this- 
city, recently achieved by Mr. Gould through his business 
and speculative relations with Mr. Cyrus W. Field, are of 
too recent date to require any special notice or comment 
here. Suffice it to say, that I fear my friend Mr. Field has 
not come out at the big end of the horn, although everything 
has no doubt been in conformity with the most approved 
business principles and in strict adherence to the most hon- 
orable methods of dealing in railroad securities. It is 
significant, however, that Mr. Field has preserved a prudent 
reticence on the subject. 

Mr. Gould, from my point of view, has been a public 
benefactor in the bold and successful stand which he has 
maintained against strikers. Though Western Union lost 
over half a million dollars by the strike of the telegraphers, 



GOULD VANQUISHES THE KNIGHTS. 



631 



which greatly alarmed the stockholders, yet Mr. Gould held 
out until the strikers were obliged to give in. He pursued 
the same policy, with a similar result, in the case of the 
Knights of Labor. During the strike of the latter I 
explained my views on the subject in a circular to my cus- 
tomers as follows : 

" The Knights of Labor have undertaken to test, upon a 
large scale, the application of compulsion as a means of 
enforcing their now enlarged demands. This has necessi- 
tated a crisis of a very serious kind. The point to be de- 
termined has been, whether capital or labor shall in future 
determine the terms upon which the invested resources of 
the nation are to be employed. To the employer, it is a 
question whether his individual rights as to the control of 
his property shall be so far overborne, as to not only 
deprive him of his freedom, but also expose him to inter- 
ferences seriously impairing the value of his capital. To 
the employes, it is a question whether, by the force of 
coercion, they can wrest to their own profit powers and con- 
trol which, in every civilized community, are secured as the 
most sacred and inalienable rights of the employer. This 
issue is so absolutely revolutionary of the normal relations 
between capital and labor, that it has naturally produced a 
partial paralysis of business, especially among industries 
whose operations involve contracts extending into the future. 
There has been at no time any serious apprehension that 
such an utterly anarchial movement could succeed, so long 
as American citizens have a clear perception of their rights 
and their true interests ; but it has been distinctly perceived 
that this war could not fail to create a divided if not a hostile 
feeling between the two great classes of society ; that it 
must hold in check, not only a large extent of ordinary 
business operations but also the undertaking of those new 
enterprises which contribute to our national progress, and 
that the commercial markets must be subjected to serious 
embarrassments. * * * * * From the nature of the 
case, however, this labor disease must soon end one way or 
another ; and there is not much difficulty in foreseeing what 
its termination will be. The demands of the Knights and 
their sympathizers, whether openly expressed or tempor- 
arily concealed, are so utterly revolutionary of the inalien- 



JAY GOUI.D. 

able rights of the citizen, and so completely subversive of 
social order, that the whole community has come to a firm 
conclusion that these pretensions must be resisted to the 
last extremity of endurance and authority." 

The manner in which Mr. Gould acquired his great control 
in some of the Western and Southwestern railroads was 
pretty fully developed in the recent investigation held in 
this city, Boston and San Francisco by the Pacific Eailway 
Commissioners. Mr. Gould's testimony, as reported in the 
daily papers of May, 1887, probably contains almost as cor- 
rect and succinct an account of his pooling arrangements 
and schemes in connection with certain railroads and his 
methods of making money out of them as can be obtained 
anywhere. His testimony, on the whole, was exceedingly 
affable, comprehensive and precisely to the point, and has 
not been contradicted in any material points by any of the 
succeeding witnesses that have yet been examined on this 
widely interesting subject. Its substance was as follows : 

[From t7ie Herald, May 18, 1887.] 

A dapper little man in plain pepper and salt (the pepper 
predominating) business suit entered the Pacific Eailway 
Commissioners' offices yesterday morning and sat down 
quietly with his not over shiny silk hat on his knee. 

The natty gentleman, unobtrusive possessor of the small 
dark and brilliant eyes, was the man of millions. 

He had lots of information for the Commission, and he 
gave them more of the inside facts of the early consolidation 
deals of the Union Pacific than they hoped to get. 

It had been expected that Mr. Gould would prove a wily 
witness, hard to corral and liable to shy over the fence at 
the slightest provocation, but at the very outset his manner 
was a complete surprise. He told the Commission* that he 
was suffering from neuralgia, and said that he could not 
speak very loud in consequence. There were times during 
his examination that his tone was faint, and it was only loud 
two or three times, when he became very much interested in 
some explanation. At all times, however, it was well modu- 
lated, and now and again had a musical cadence about it 



GETTING CONTROL OF UNION PACIFIC. 



633 



that was very pleasing. He first became interested in 
Pacific roads in 1873. He bought Union Pacific stock in the 
market, but it went down to fourteen cents on the dollar. 
He held about 100,000 shares. He had a consultation with 
Sidney Dillon, and finally made a proposition to fund the 
floating debt in bonds, of which he took a million dollars' 
worth at above their par value. In 1874 he became a direc- 
tor and served on the executive committee. He continued 
in the direction during 1874, 1875 and 1876, and went over 
the road twice a year. He had no interest in the Fisk suit, 
but knew it was brought. He had no contingent interest 
whatever in the suit. 

He became interested in the Kansas Pacific in 1878, but 
thought he knew the road in 1874. He remembered a prop- 
osition looking toward a unity of interest between the Den- 
ver Pacific and the Colorado Central. 

Being examined as to the positions of the roads, and as 
things did not appear to be very clear, Mr. Gould, putting 
his hand to his inside pocket, said : " I have a little map 
here if you are not familiar with the location." 

The little map was brought out and all hands gathered 
around it, while Mr. Gould's index finger went on an excur- 
sion over States and Territories in absolute defiance of the 
Inter-State Commerce Law. He recalled the fact that the 
plan of consolidation was considered as early as 1875, after 
Mr. Anderson read some extract from a paper, but he said 
it was not carried out then. He might even have had a talk 
with Scott about it on further consideration. 

The little road connecting with the Colorado Central was 
built by him, and was the result partly of the contest be- 
tween the Union Pacific and the Kansas Pacific. Prior to 
1878 he could not recollect having owned any stock or se- 
curities of the Kansas Pacific. His interest in the Union 
Pacific has increased to 200,000 shares, the total issue of 
stocks being 367,000 shares. He kept books of his transac- 
tions. Mr. Morosini kept them a part of the time. 

Q. Where are the books % A. I have them. 

Q. Where ? A. In my possession. 

Q. Are they at the service of the Commission % A. If they 
desire them, with the greatest of pleasure. 

This was the first sensation of the day, and the witness 
smiled blandly as he felt the full force of it. 

Up to this time he had answered every question promptly. 



634 J AY gouux 

There appeared to be no hesitation on his part, and, indeed, 
there was none during the entire day's session. Almost 
every preceding witness had taken refuge behind " I don't 
know," or " 1 cannot remember," or " Eeally I am not sure," 
but there was none of this from Gould. And the apparently 
full and free offer of his books capped the climax. 

After this whenever his memory was in any way at fault 
the witness fell back on the books. In asking him what he 
had bought certain stocks for he said the books would 
show. 

" Will your books also show who the broker was ?" 

*' Oh, yes ; certainly, certainly, certainly." 

In the matter of the St. Louis pool he had conversed with 
a number of persons. 

Q. With whom did you converse ? A. I presume with all 
the signers of the agreement. 

Q. Will you tell us all about the preliminary measures 
leading up to this ? A. I would have the neuralgia a good 
deal worse than I have if I undertook to tell you all of the 
details. 

This was the original proposition of consolidation, which 
was a stock instead of a bond agreement, and it was soon 
demonstrated that it would not work. 

Q. How soon after this was the new arrangement entered 
into ? A. Almost immediately afterward, I think. The ob< 
ject was the funding of a heterogeneous mass of securities 
into one class of securities. 

Q. Did you confer with others ? A. I conferred with my- 
self as well as others. What I thought was a fair price for 
me was a fair price for the others. 

Q. To whom did you deliver your bonds % A. I suppose 
to the committee, but I do not know. 

Q. But you would not deliver $2,000,000 to a man in 
whom you did not have confidence % A. Probably not. 

Q. Who kept the accounts % A. I don't know. 

Q. You don't remember % A. I don't charge my memory 
with these things after they are over, but my books will 
show, and they are at the service of the Commission. 

Mr. Gould's manner in saying this was unusually suave 
and polite, and the lines of his mouth relaxed just enough to 
suggest a smile. 

In speaking a few moments later of the securities bought 
by Mr. Gould from the " St. Louis parties " he was asked 
of whom, he bought them. 



THE BOOKS WIU, SHOW. 635 

u I cannot tell about that off-hand, but my books will show 

it." 

" Which of the St. Louis people did you confer with ?" 

" I think they came on here to see me. They were tired 
out and wanted to sell, and came over to do it." 

u Then you bought all the securities first and tried to get 
some other gentlemen to go in with you afterward ?" 

" Yes, several gentlemen whom I thought would be of ser- 
vice to the road. There ought to be some books. Some- 
body must have kept accounts of the transactions. My rec- 
ollection is that these people came on and told me they 
wanted to sell. I asked them how much they thought they 
ought to have and they gave me the price quoted in the 
agreement." 

" I simply said, c I will take them,' and that was all there 
was to it. That is my recollection. In 1879 I owned about 
$4,000,000 worth." 

The examination led into the stamped income bonds of 
the Kansas Pacific, and Mr. Gould was asked as to the condi- 
tion of the road. He thought it was poor. The road had a 
large intrinsic value, but it had been badly financed and its 
securities were way down. 

Q. Did you not buy some of your securities abroad ? A. 
I bought two millions of Denver Pacific at seventy- four 
cents, I think, from some Amsterdam people. I was in Lon- 
don and heard that they wanted to sell. I was afraid to go 
over, because I had very little time, and thought they would 
probably take a couple of days to smoke before finding out 
whether they would sell or not. But I was mistaken. I 
went over and got to Amsterdam in the morning ; washed 
and had my breakfast. I saw them at eleven, bought them 
out at twelve, and started back in the afternoon. 

When Mr. Gould was asked as to the prices he had paid 
for the securities with which he had acquired the Kansas 
Pacific bonds he took out his papers and handed the Com- 
mission a series of neatly written reports on these purchases 
and sales. 

He purchased in 1879 St. Jo. and Denver first mortgage 
bonds, $1,562,886.69, for $603,204.78. 

Of these, $617,000 worth he sold to Kussell Sage, F. L. 
Ames, Sidney Dillon, S. H. H. Clark, Ezra H. Baker, F. G. 
Dexter and Elisha Atkins for $246,800. 

On January 24, 1880, he surrendered $956,779.76 in these 



636 



JAY GOULD. 



bonds and scrip in exchange for 9,568 shares of Union Pa- 
cific at par. 

For St. Jo. and Denver Pacific receivers' certificates to the 
number of fifty-nine he paid $60,695, and on January 24, 1880, 
he surrendered them for 590 shares of Union Pacific at par, 
or $59,000. 

Of St. J. and Denver stock during 1879 he acquired 8,819 
shares, and sold 3,806 shares to the same persons purchas- 
ing the bonds. On January 24 he surrendered the 5,013 
shares he had remaining on hand at par for $100,200. 

During the same time he bought $781,000 worth of the St. 
Joseph Bridge bonds for $586,940, of which he sold to Sage 
and Dillon 150,000 worth for $112,500. 

He also bought 4,000 shares of stock for $6,000, making 
the total cost of $834,000 bonds and 4,000 shares of stock 
$480,440. Received in exchange for the whole business, 
6,340 shares of Union Pacific stock at par, making $634,- 
000. 

The gentlemen to whom Gould sold the securities were all 
directors of the Union Pacific. These gentlemen, the wit- 
ness thought, retained their bonds until the consolidation, 
as they were bought with a purpose. " The Denver stock 
was called trimmings," said Mr. Gould, smiling, " and went 
with the bonds." /• 

On the consolidation of the company he transferred 27,- 
000 shares of Union Pacific Railroad stock for new stock. 

He had transferred his Union Pacific stock at one time to 
some other parties on account of a peculiar law in Massa- 
chusetts, which enables an attachment of stock on a suit, 
whether there was anything in it or not. 

" I found out about that law," said Mr. Gould, " and put 
the stock in somebody's else's name. ''You can't tell any- 
thing," he continued, sharply, " about any stock list. There 
are many shares of stock held by brokers for years." 

After the consolidation he had begun to distribute his 
stock among other holders. 

"I made up my mind," he said, ' l it would be better to 
have four or five stockholders do a little of the walking in- 
stead of one." 

Q. That idea was very much stimulated by the rise in the 
stock after the consolidation, was it not % A. Yes, because 
the stock went up then so much that there wasn't enough to 
go round. 



DEALING IN RAILROADS AIX HIS LIFE), 637 

The witness told the story of the employing of General 
Dodge and Solon Humphreys to recommend the consolida- 
tion. They were fair men, he thought, and would make a 
fair report. 

He had not talked to them after they went West to make 
their report. 

Q. How is that? A. Well, he naively replied, while they 
were making their examination my interests had changed. 

Q. They had changed ? A. Yes, I had bought the Mis- 
souri Pacific. 

Q. Did General Dodge and Mr. Humphreys look into the 
past history of the road ? A. I consider the future of a road 
more important than its past. 

Q. Yes, but what 1 want A. The past was no criterion 

as to the Union Pacific road. 

Q. But don't you think that General Dodge and Mr. Hum- 
phreys ? A. " All my life," said Mr. Gould, warming up ; 

"all my life I have been dealing in railroads — that is, since I 
have been of age, and I have always considered their future 
and not their past." 

" That is the way I have made my money," said he. " The 
very first railroad I ever bought had a most deplorable past, 
but its future was fair. I paid ten cents on the dollar for its 
bonds, and finally sold the stock for $1.25. It was the fu- 
ture of the Union Pacific that drew me into it. I went into 
it to make money." 

" You were not in favor of the consolidation at the time it 
was made?" 

"No, my interests had changed." 

" Did you try to stop it % " 

"Well," said Mr. Gould, slowly, "my opposition to it was 
known and they were greatly alarmed." 

"Who?" 

"Ames, Dexter, Atkins and Dillon. They came on from 
Boston to see me about it. They had heard that I was go- 
ing to build an extension to the Denver Pacific and connect 
the Missouri Pacific. They said I was committed to the 
consolidation and laid right down on me. I offered my 
check for $1,000,000 to let me out, and I have offered it 
since. 

" I will pay it now," said the witness, with a strong rising 
inflection of the voice and looking hard at the Union Pacific 
people in the room. 



638 JAY GOULD. 

" I offered them a million, but they would not let me out 
of the room until I had signed an agreement to carry out the 
consolidation." 

" Where is that paper ? " 

" I suppose it is in Boston. If I could have carried out 
my Missouri Pacific plan I would have a property now that 
would be worth par." 

" I don't think you have any reason to complain of your 
profits in the matter," replied Mr. Anderson, at which 
Mr. Gould partly closed his eyes to hide their twinkle, and 
said nothing. 

The paper which he signed was an agreement to carry out 
the consolidation on certain terms. The consolidation was 
an assured fact after January 15, because the witness held 
the controlling interest. 

u But I have now ceased to be the tower of the Union Pa- 
cific," he said. 

In asking Mr. Gould about his connection with Lawyer 
Holmes at the time of the consolidation, Mr. Anderson asked 
him whether he was sure about a certain conversation. 

"Yes," he said, " for I had it impressed on my mind." 

"How was that?" 

u Well, I remember parting with a lot of stock at ten cents 
for which I could have got par a few days afterward. 
Wouldn't that impress the occasion on your memory, Mr. 
Anderson 1 " 

Everybody laughed at this, and the witness, although he 
had lost a million or two, laughed as heartily as the loudest. 

As far as the Denver Pacific stock was concerned Mr. 
Gould said it was worth practically nothing unless the con- 
solidation was made. It was the signature of the Union Pa- 
cific that made it good. 

" Do you consider that the trustees fulfilled their duty in 
letting this stock out of trust % " he was asked. 

" I consider that it was the only thing to do, and I stand 
on what was done. I am ready to take the responsibility 
for it that day, or this day, or any other day." 
[From the New York Times, May 19,;i887.] 

Jay Gould gave another day to the Pacific Railway Com- 
mission yesterday. His manner was, as usual, cool and 
collected, and he was apparently full of a patient desire to 
tell everything he knew. Yet Mr. Gould told very little, 
although he answered hundreds of questions, some of them 



HIS ANXIETY TO PROTECT THE GOVERNMENT. 639 

puzzling enough to drive a less long-beaded financier into a 
corner. The Denver Pacific stock and the way it got out of 
the trust were first taken up. Mr. Gould said he thought 
the course taken was best for everybody. Naturally he 
wanted the Denver Pacific to go into the consolidation, 
holding as he did, $1,000,000 of the securities, and being 
trustee of over $3,000,000 more. At first it was doubtful if 
the Union Pacific would take it, but it did for the franchises. 
*'I want to say again,'' declared Mr. Gould, "that no direc- 
tor or person connected with the Union Pacific ever made a 
dollar out of Denver Pacific. I am glad to put a final nail 
in that coffin." 

His plan at one time was to build a line from Denver to 
Ogden, via Salt Lake and Loveland Pass. It would have 
been snorter than the Union Pacific and obtained more local 
business, for the Union Pacific ran north of the mineral belt 
and the Southern Pacific south of it. After he obtained the 
Missouri Pacific he saw what a good thing he had in it, but 
he was persuaded to give his pledge to go on with the con- 
solidation of the other roads. The Boston folk became 
agitated within a month after he bought the Missouri 
Pacific, and got the pledge from him. If the Missouri Pa- 
cific had been put through it would have injured the Union 
Pacific a great deal. 

" According to the ethics of Wall street," Mr. Gould was 
asked, do you consider it absolutely within the limits of 
your duty, while a director of the Union Pacific, to purchase 
another property and to design an extension of the road 
which would perhaps ruin the Union Pacific?" 

u I don't think it would have been proper. That's the 
reason I let it go." 

" Did you consider your duty to the Government \ " 

" I had considered it." 

<c How would the Government claim have been affected by 
building a parallel line ? " 

u It would have been wiped out." 

After the Thurman bill had been sustained by the Supreme 
Court Mr. Gould had a plan to build a road from Omaha to 
Ogden, just outside the right of way of the Union Pacific, 
and give that road back to the Government. It would give 
others "a chance to walk." The Government tried to 
squeeze more out of the turnip than was in it. For 
$15,000,000 a road could be built where it had cost the 
Union Pacific $75,000,000. 



640 JAY GOUI<D. 

" Tou were not devoted to the interests of the Govern- 
ment ?" 

" I wanted to protect them. Their legislative action hurt 
their own interests and put those of the stockholders in 
jeopardy. The Government repudiated their own contracts. 
Cash was offered to pay the Government the Union Pacific 
debt. I had the debt reckoned up and offered to pay it. In 
1877 or 1878 1 made the offer to the Judiciary Committee, 
of which Mr. Edmunds was Chairman. I made the offer 
myself. The debt was estimated at $15,000,000 or $17,- 
000,000. But the Government would not concede that 
interest terminated with the bonds. No action was taken on 
the proposition." 

Mr. Gould thought he wrote his own resignation as Direc- 
tor of the Union Pacific. He resigned because he ought 
not to deal with the company while one of its directors. 
He put it in President Dillon's office. Mr. Dillon knew 
what it meant. 

"What did it mean?" 

"That if the consolidation went through it involved large 
transactions with Jay Gould, and if I had staid in it would 
have complicated things. Before January 10, 1880, no bar- 
gain was made to pay par for St. Jo. and Western bonds, 
nor Kansas Central, nor 239 for Central Branch stock. 
That came afterward." 

The Colorado Central lease was canceled on account of a 
State law against consolidating competing lines. Mr. Gould 
did not know that the Dodge and Humphreys letter was to 
be presented to the meeting of January 24. He was proba- 
bly informed of the consolidation on the day it took place. 
He was also probably present at the first meeting of the 
new company on January 24. Mr. Gould's resignation from 
the Kansas Pacific Board was gone over, and in summarizing 
his reasons for resigning Mr. Gould said he did not want to 
be mixed up with trusteeships and directorships. When he 
was not a Union Pacific director he felt at liberty to take 
care of himself. There was a chance that the properties 
might be made hostile to him, and then it would have been 
improper for him to be a director. He did not know 
that Russell Sage was to move the acceptance of his resig- 
nation. 

" At the Kansas Pacific meeting a list of the branch lines 



YOU PAY MORE FOR RUBIES THAN DIAMONDS. 641 

obtained from you was read. President Dillon said the 
company had bought them. What did he mean ? " 

"Possibly he referred to the directors' agreement with 
me." 

" But we can find no record of this in the books. Don't 
you think he referred to the agreement with the Boston gen- 
tlemen?" 

" Yery likely, but it had no authority until it was accepted 
or rejected." 

Mr. Gould was set to explaining some discrepancies be- 
tween the accounts of his dealings in branch securities, 
handed in on Tuesday, and the list submitted by Controller 
Mink. Mr. Mink gave 15,162 shares of St. Jo. and Western 
stock, and Mr. Gould 8,119. The difference was explained 
by Mr. Gould's getting some stock for building the Hastings 
and Grand Island. He retained control of the $150,000 St. 
Jo. Bridge bonds he sold Dillon and Sage and turned them 
over with his own. His $479,000 Kansas Central bonds and 
2,521 shares of the stock cost him $431,820.25 at the time he 
bought the Missouri Pacific. They all went into the con- 
solidation for $479,000. Mr. Gould bought the Central 
Branch of the Union Pacific from Oliver Ames and Presi- 
dent Pomeroy, who came to New York and induced him to 
go and look at the property. 

" I thought it was doing a big business," said he. " Afs 
terward I learned they had kept the freight back for a week 
to impress me. So I saw a freight train at every station 
when I got there. I bought the road anyway." Its total 
cost to Mr. Gould was $1,826,500. Over the Central Branch, 
whose stock was disposed of by Mr. Gould for 239, there 
was a little stir in the hearing, but the witness tranquilly 
explained that the road was practically stocked at only 
$2,500 a mile, and therefore the stock ought to range way 
above par. 

" Has the road earned dividends ? " he was asked. 

"I don't think so." 

"Have the aggregate earnings exceeded the fixed and 
Government charges ? " 

"I never figured it out. Stock doesn't always depend 
upon dividends altogether. I paid 750 for my Missouri Pa- 
cific — 4,000 shares at that figure. You pay more for rubies 
than for diamonds and more for diamonds than for 
glass." 



642 JAY GOUIyD. 

Then the examination turned to the days just after the 
consolidation, and the witness was asked if there was any 
corporate action of the new company before the stock was 
turned over to him. 

"All I know,'' he said, "is that the stock of the new 
company was delivered." 

" Was the new company bound to carry out the Kansas 
Pacific obligations of this sort ? " 

" Well, I suppose it assumed the Kansas Pacific obliga- 
tions." 

" Why were you not paid in Kansas Pacific consols instead 
of stock?" 

" I suppose they preferred stock to bonds. I was clever 
to them and took stock." 

Another turn carried questions and answers to other differ- 
ences in the accounts, but the commission got little light. 
"It's safe to say the lawyers got the difference," chuckled 
Mr. Gould, at the end of the set of questions. He had made 
large cash advances, at different times, to the Kansas Pacific 
to meet the floating debt, and very likely these would have 
to be counted in to explain matters in all cases. There was 
one point upon which the witness strongly insisted, and that 
was that all through the negotiations and transactions no 
class of people nor any particular holders of securities ex- 
perienced any discrimination in their favor, as compared 
with the treatment given everybody else. 

After the consolidation Mr. Gould said he had few trans- 
actions in Union Pacific branch lines. He had an interest in 
the Denver & South Park, however, a minority interest at first, 
but subsequently he bought the whole road from Governor 
Evans. "I'm snowing you my whole hand," he said, cheer- 
fully, at the end of the catalogue of the branches. Of the 
Union Pacific's legal expenses he knew of none which were 
not perfectly legal. 

"Who were the road's counsel in Washington?" 

" Messrs. Shellabarger & Wilson were the only ones, as 
far as I knew." 

"Have you ever been to Washington on business of the 
company ?" 

"Yes. And I paid my own hotel bills." 

"Do you recall persons sent to Washington from other 
places in the interest of the road ?" 

"Judge Usher and Mr. Poppleton." 



"I AM SHOWING YOU MY WHOI^E) HAND." 643 

" Who represented the Kansas Pacific ?" 
"Judge Usher. I don't know that they aad anybody in 
Washington." 

"How often did you go to Washington for the road?" 
" I was there while the Thurman bill was pending. It 

Eassed, and I haven't been there since. No, I take that 
ack. I was down before the Labor Committee. I got 
rather disgusted." 

" Do you know whether anything was spent to influence 
legislation ?" 

" No, sir. I know of no such expenditure." 

" Where could we find records of such transactions !" 

"I don't think such transactions exist." 

u Do you remember advising, at a meeting, that Mr. Ord- 
way, of Washington, be employed in the interests of the 
Kansas Pacific?" 

"No, sir." 

Mr. Anderson read from the minutes of a Kansas Pacific 
meeting, in 1876, and Mr. Gould remembered that Senator 
Kollins, a great friend of Mr. Ordway, asked him to write a 
letter about it. He knew of nothing coming from the letter. 

"Do you remember any talk of fighting the Credit Mobi- 
lier?" 

" I saw some of their stockholders and they said they 
would turn in their stock to us. Others wouldn't. The 
Credit stockholders alleged that the Union Pacific owed their 
company a great deal of money. I succeeded in getting the 
great bulk of the stock turned over before a judgment was 
obtained." 

" You remember your address to the Union Pacific presi- 
dent and directors." 

" I wanted to put myself in a position to bring a suit." 

" Who opposed this proposed action of yours f ' asked Mr. 
Anderson, reading from the minutes of a directors' meeting 
that Mr. Dexter moved " to decline to bring suit, as request- 
ed by Mr. Gould." 

"I think the directors declined, and I brought the suits in- 
dividually." 

" There is another letter of yours to the directors, request- 
ing them to begin suit against the Credit for a full account- 
ing of all profits, under certain alleged contracts,'' etc 

* I think that was on a different set of contracts.''" 



Q4A JAY GOUI,D. 

Mr. Frederick L. Ames, the first witness called, testified 
that he was formerly a stockholder in the Union Pacific 
Railroad, and is a cousin of the Hon. Oliver Ames, Governor 
of the Commonwealth. He was familiar with the relations 
of this road and the Kansas Pacific Road prior to 1877. 
" I personally attended," he said, " to the affairs of the road 
under the direction of my father, Oliver Ames. The first 
dividend of the road was paid in 1875 or 1876. I do not 
remember the rate paid. I was somewhat familiar with the 
condition of the Kansas Pacific. I did not think the stock 
of much value in 1877. Mr. Jay Gould was instrumental 
in buying up the Kansas Pacific securities in 1876. I un- 
derstood that he owned a large amount of the funding bonds 
and unstamped incomes. I never knew what the respective 
interests of any of the gentlemen interested were. I owned 
no securities that entered into that pool. I received two 
certificates for $50,000 each. I have not these in my posses- 
sion now. They were turned over to somebody. These 
certificates were probably issued to every member of the 
pool. I think I paid $100,000 to the Farmers' Loan and 
Trust Company." 

Mr. Anderson— Have you been able to find those certifi- 
cates, Mr. Mink 1 v 

Controller Mink — They are not in our possession, sir. 

Mr. Anderson — It is very strange that w© cannot get any 
clue to these certificates. 

Continuing, Mr. Ames testified as to the manner in which 
the business of the pool was conducted, a copy of the con- 
solidated mortgage being introduced in evidence. 

" I do not remember," he said, "that I ever contributed 
the $383,000 funding bonds named in this mortgage. My 
connection with this pool was limited to the advancement 
or the $100,000. The pooling rates and mortgage rates 
were identical. I was a director in the Kansas Pacific 
Road in 1879. I cannot explain why bonds were issued to 
persons having claims against the road at a rate which 
would*exaggerate its indebtedness more than $1,000,000. I 
exchanged my bonds for Kansas Pacific bonds. I do not 
remember that, in 1880, $2,950,000 of preferred stock was 
issued to Jay Gould at 75 when the bonds were worth 94. 
I do not know of any other transaction of the kind. I do 
not know how the Kansas Pacific Road came to be indebted 
to Jay Gould for $2,000,000 at this time. All the directors 



WHAT MR. AMES SAYS ABOUT HIM. 645 

were in favor of the consolidation except Jay Gould. He 
was unwilling to accede to any such terms as we thought we 
were entitled to, and seemed very much agitated at the 
course we had taken. The final consummation was reached 
at Mr. Gould's house. I do not remember that we would 
not let Mr. Gould leave the room until he had signed the 
paper. The paper was signed by all present. The basis 
of the consolidation was $50,000,000." 

When asked how he explained the payment of dividends 
by the Union Pacific with a condition of affairs which re- 
quires a sale of stock for the extinction of a floating debt, 
Mr. Ames said that the declaration of the dividend was 
made upon the statement of the net earnings, and the road 
might very well have earned the dividends several times 
over and at the same time have been building roads and 
borrowing money and using its funds for other purposes, 
in addition to the property, which would not interfere with 
the right to declare dividends. Mr. Ames also said that the 
directors of the Union Pacific were largely controlled in 
signing the agreement read at the forenoon session by the 
fact that they were cornered by Jay Gould. " I think it 
has resulted favorably for the Union Pacific," he continued, 
" and I would not take back the action if I could. I made 
nothing by the consolidation, as I did not sell my Kansas 
Pacific stock, but hold it now. Mr. Gould made about 
$3,500,000." 

Judge Dillon cross-examined Mr. Ames, and showed from 
his evidence that he had no personal ends served by the 
consolidation. He said that his interest in the Union Pa- 
cific is larger now than it was in 1880, and that he is one of 
the largest stockholders. 

JAY GOULD AND HIS SYSTEM. 

The following from the New York Times of April 27, 
1887, contains a graphic account of Mr. Gould's mode of 
reviewing his system of railroads : 

On first thought it seems almost impossible that Jay 
Gould has only been a railroad magnate of the first class 
little more than half a decade, yet such is the fact. In 1879 
he owned only the nucleus of his present Southwestern 
system of railroads, and as the rival of the Wabash through 
considerable territory was the Missouri Pacific, he felt by no 
means at ease regarding the ultimate fate of his venture. 



646 JAY GOULD. 

Commodore Garrison owned a controlling interest in Mis- 
souri Pacific, which was managed by his brother Oliver. 
Commodore Garrison did not like Mr. Gould, and would not 
have objected to make Gould's purchase of Wabash a dear 
bargain. He probably would have done so had it not been 
for Oliver Garrison. The latter and Ben W. Lewis, Gould's 
manager of the Wabash, were close friends, and Garrison, 
as chief executive of the Missouri Pacific, did nothing to 
injure Gould's property. But when Mr. Lewis called upon 
Mr. Gould in New York one day toward the close of 1879, 
and tendered his resignation on the ground of other interests 
which claimed his attention, Gould immediately saw break- 
ers ahead, and said so. Lewis suggested.that he remove 
the breakers by buying the control of Missouri Pacific. 
The suggestion was not allowed to get moldy. Gould 
called upon Oliver Garrison and offered $1,500,000 for the 
Garrison interest in the road. Garrison was much surprised, 
and said it would be necessary to consult with the Commo- 
dore. He said, however, that $1,500,000 was at least 
$500,000 too low. When the Commodore heard of Gould's 
offer he rubbed his hands, laughed, and put the price at 
$2,800,000.y Gould retorted that he could have bought it on 
the previous day for $2,000,000. The Commodore ex- 
plained that the difference between yesterday and to-day 
was $800,000. Gould said nothing and retired. He made 
another effort on the following day. The Commodore had 
been thinking. His thoughts cost Mr. Gould^ $1,000,000, 
for his price on the third day of the negotiations was 
$3,800,000. Mr. Gould did not express his thoughts, but his 
speech demonstrated that he appreciated the danger and 
expense of delay. He said, "I'll take it," and he did. 
Thus from a beginning of less than 1,000 miles he secured 
control of a system of over 5,000, forming the Missouri 
Pacific, Iron Mountain, and International and Great North- 
ern and their branches into one compact system. The bar- 
gain, in comparison with the present value of the property, 
was as close a one as Mr. Gould ever managed to make, and 
from the day it was closed he has lost no opportunity of 
extending his railroad property, which, with lines that are 
yet on paper, but,„are almost certain to be built, is soon 
likely to embrace at least 6,000 miles of rail. 

Though the General Manager's office is at St. Louis, and 
none of the Gould roads — for the Wabash is not considered 



HOW HE TRAVEL ON HIS ROADS. 647 

in the system — run east of the Mississippi, nothing of im- 
portance is transacted there without the knowledge and 
sanction of Mr. Gould. Private wires run from the St. 
Louis office to the Western Union Building, in which is Mr. 
Gould's private office, where he spends some hours each 
day sitting at a desk that never ought to have cost more 
than $25. 

He has traveled many times over every mile of his rail- 
roads. There is an immensity of interest in such a trip 
when made for the first time, or even the second or third, 
but it has been made so often by Mr. Gould that he has 
thoroughly absorbed all the pleasure to be obtained from it 
except that which smacks of dollars and power. His trips 
occupy about three weeks from the time his special car, the 
Convoy, leaves St. Louis until it returns to that hot and 
dusty city of pageants and conventions. 

When word is flashed to St. Louis that Mr. Gould is on 
his way, every official on the system packs his head full of 
information, and there is unwonted activity from Omaha to 
Galveston and from Fort Worth to San Antonio. All of 
the system's executive force was selected either by Mr. 
Gould or by trusted officials in whom he had implicit faith, 
and the heads of divisions who work for Jay Gould could 
not work harder for anybody else, although in some instances 
their bank accounts do not show it. 

Mr. Gould lately was in the Southwest on a tour of inspec- 
tion. On his trips he is always accompanied by General 
Superintendent Kerrigan, a New Yorker by birth, a South- 
westerner by education. Physically they are in marked 
contrarst. The cleanly shaven, fair-complexioned Superin- 
tendent would make two of his employer. In manner they 
are much alike, though Kerrigan has a spice of bluffness 
that m lacking in the other. He has the composed, unex- 
citable manner of Gould to perfection, and is never known, 
no matter how great the provocation may be, to speak ex- 
cept iri a low-pitched tone. He is a walking railroad ency- 
clopedia, and has the topographical features of the South- 
west — fevery corner of it— at his fingers' ends. He has 
been Employed on railroads of the system for over thirty 
years. I Prom his Superintendent Mr. Gould obtains such 
detail^ as the latter gathers from the Division Superintend- 
ents ,'and other officials, but in making a trip Mr. Gould 
insists upon stopping at every point included in one of Mr. 

I 
! 



648 JAY GOUI<D. 

Kerrigan's regular trips of supervision. He is always 
accompanied by a stenographer, who is also a typewriter, 
and the Superintendent and the heads of divisions follow 
the same plan. 

Upon arriving at a station at which it has been decided to 
make an inspection, Mr. Gould asks how long a stop will be 
made. The answer may be " an hour." Mr. Gould looks 
at his watch. He then accompanies the Superintendent on 
a part of his rounds, listens quietly to his talk with the 
railroad officials of the place, and having heard all he cares 
to listen to, wanders around by himself while the Superin- 
tendent picks up the information which later he will give to 
his employer Mr. Gould manifests no impatience until 
the hour has been exhausted. But if the engineer is not 
ready to start on the minute, and all hands are not in their 
places on the car, he begins to fidget, and is restless until a 
fresh start is made. 

He is a strong advocate of method. The day's work is 
laid out in the morning and almost before the train starts in 
the morning he has settled how many stops can be made 
during the day and where the night can be spent. He dines 
and sleeps on board his car from the start to the finish of a 
three weeks' trip. At night the Convoy is run to the quiet- 
est part of the yard, as the owner objects to more noise than 
he can avoid at night, though he can apparently stand as 
much as any one else in daylight. His car is always a curi- 
osity along the line, and people come from far and near to 
look at it as it stands in the evening in a secluded spot, se- 
cure in its loneliness. In some parts of the country through 
which his roads run he is quite as much of a curiosity in the 
eyes of the country folk as a circus, and were he to stand on 
the platform after the manner of James G. Blaine, would at- 
tract quite as big a crowd as that gentleman. He is never 
apparently anxious to achieve notoriety in that way, and is 
quite as modest in his demeanor while on one of his tours 
as he is in his office or his Fifth Avenue mansion. In the 
latter, as a few newspaper reporters know, he is more* unas- 
suming and far more polite than a majority of his thousand - 
dollar employes. J 

Mr. Gould meets some odd as well as prominent people on 
his trips and occasionally has a peculiar experience. On his 
first visit to Galveston, Texas, he discovered that it was on 
an island. Like a good many others he imagined it was on 



PERPETRATES A JOKE IN TEXAS. 649 

the mainland. On this occasion a number of citizens had 
been appointed to do him honor and he had promised to take 
up his quarters at a hotel. The committee had neglected to 
secure carriages for the party, and made a desperate effort 
just before the arrival of his car to repair the omission. 
This it was unable to do. There was an election at Galves- 
ton on that particular day. It was a hot one, both the day 
and the election, and everything on wheels had been bought 
up by the contending parties. Twenty dollars was offered 
for a hack and refused. The committee felt forlorn until 
Mr. Gould laughed at its dilemma and remarked that he saw 
no hills that he couldn't climb. This is the only joke 
charged against Mr. Gould by the people who live on the 
line of his roads, for the highest point of Galveston is only 
three feet above the sea level. The inhabitants claim four 
feet, and denounce as a libel the statement made by people 
who live inland to the effect that tide water is three feet 
higher than Galveston. 

While skimming along over the International and Great 
Northern, between Houston and Galveston, Mr. Gould can- 
not look on either side of him without looking at land owned 
by A. A. Talmage, manager of the Wabash Eailroad. Mr. 
Talmage owns a tract or ranch — though there are but few 
cattle on it — of 160,000 acres. For this land Mr. Talmage 
paid 12J cents per acre. He would probably refuse to sell 
it to-day for $6 an acre. If Mr. Talmage owned nothing 
else besides this ranch he might be considered above want. 
Mr. Gould owns some land in different parts of the country 
also, but as a proprietor of the soil ;ne occupies a much 
lower grade than Manager Talmage. George Gould proba- 
bly owns as much land — railroad land grants not considered 
— in the Southwest as his father, and is always on the look- 
out for bargains. These are always to be had at the close 
of a disastrous agricultural or cattle season. Newcomers in 
Texas are liable to forget that disastrous years only occur 
occasionally, and that in three favorable seasons the profits 
will be large enough to stand one bad season in three. They 
may hear of all this after they sell out, but the old settler is 
not offering information that can only be bought with ex- 
perience until it is valuable as a mournful reflection. 

The Iron Mountain Eailroad has a station called Malvern. 
It is 44 miles south of Little Eock. As his car pulls into Mal- 
vern Mr. Gould sees on a narrow gauge railroad that also has 



650 JAY GOUUD. 

a station there an engine with a diamond-shaped head-light. 
The narrow gauge road runs from Malvern to Hot Springs. 
Mr. Gould has no interest in it, but he knows it was built 
and is owned — every spike in it — by a man who received his 
first start in life from the same man who placed him on his 
feet. The Hot Springs railroad is owned by "Diamond 
Joe" Eeynolds, who was started in business many years ago 
by Zadock Pratt, of the town of Prattsville, Greene county, 
N. Y., when the young man lived in Sullivan county, right 
across the line of Delaware county, Penn., where Jay Gould 
was enabled by Mr. Pratt to tan hides with oak and hemlock 
bark, not after the fashion of Wall Street. Eeynolds and 
Gould were assisted by Mr. Pratt about the same time. 
Eeynolds is not as wealthy to-day as Mr. Gould, but he owns 
all the money he wants, and Mr. Gould has often said it did 
not need fifty millions to secure contentment. " Diamond 
Joe " Reynolds is a rich man and he spends much of his 
time between Chicago and Hot Springs. On his first visit 
to Hot Springs he was compelled to stage it from Malvern. 
The ride disgusted him as much as the Springs delighted 
him. He found a man who had obtained a charter for a 
railroad from Malvern to the Springs and who had no money. 
The charter and some money changed hands. Eeynolds 
built the railroad and owns it, rolling stock and all. The 
road is 24 miles long. He made his money in wheat, but 
not in Sullivan county. After getting a start there he went 
West and shipped wheat from Wisconsin to Chicago. He 
shipped it in sacks and marked the sacks with a diamond and 
inclosed in it the letters " J. O." It was from this circum- 
stance, because the sacks and trade mark became widely 
known, that he obtained the sobriquet of " Diamond Joe," 
and not as those who have only heard of him think for a 
penchant for gems, and Mr. Eeynolds is modest as well as 
rich. 

Mr. Gould travels like a rocket while inspecting his roads. 
In this way he gets a certain amount of exercise, for, as trav- 
elers know, a heavy train drawn at the rate of 50 miles an hour 
will make little fuss in comparisoc with the antics of a single 
car tacked to an engine making the same rate. Mr. Gould 
often travels in the Convoy at a 50-mile gait, and during 
such a trip he has been known to change seats — from one 
side of the car to the other — not of his own volition, but 
without changing countenance. So long as Superintendent 



HE BRINGS AN ENGINEER TO TIME. 651 

Kerrigan keeps his hand off the bell rope Mr. Gould makes 
no remonstrance, but accepts his shaking without a grumble. 
He changed engineers on one of his recent trips without 
knowing it. The engineer had been running slowly, for rea- 
sons of his own, in spite of numerous pulls at the bell cord. 
When, however, he discovered that dinner was under way 
he pulled the throttle open, and the locomotive darted 
ahead suddenly as if going through space. The jar cleaned 
the table like a flash. At the next station the engineer was 
promoted to a freight train. 

A REMINISCENCE OF KANSAS PACIFIC. 

There is an interesting piece of information regarding the 
deal in Kansas Pacific in the testimony of Mr. Artemus H. 
Holmes, formerly the attorney of that company, showing 
how the stock made a marvelous leap from two or three 
dollars to par in seven days. Mr. Holmes testified as fol- 
lows : 

From 1873 to 1877 the market value of all the Kansas Pa- 
cific securities was extremely low. The Kansas Pacific stock 
was $2 to $3 a share and practically valueless. Land grant 
bonds were worth 10 cents on the dollar, and Denver exten- 
sion about 40, but ranged from 50 to 70 in 1876 to 1878. The 
first mortgage bonds were below par, the company's credit 
was gone and the stock unmarketable. Sidney Dillon, who 
was then President of the Kansas Pacific Company, was anx- 
ious to have the matter settled as quickly as possible. At 
the former's suggestion a friendly suit was brought on Janu- 
ary 17, 1880, before Judge Donohue, in the Supreme Court, 
in this city, to settle the ownership of the Denver Pacific 
stock. The trustees said they could not do anything with 
the stock that would injure it. On J anuary 20, 1880, Hor- 
ace M. Buggies, as referee, heard argument, the case was 
closed in two days, the decision was made January 23 and 
the decree signed by Judge Donohue on January 24, giving 
the stock to the Gould party. Mr. Holmes stated : " All 
the time this was pending the articles of consolidation were 
being drawn up, but I did not know anything about it until 
they were signed on January 24." Beferee Buggies decided 
that 29,000 shares of Denver Pacific stock free from mort- 
gages should pass to the Kansas Pacific. This was put into 
the Union Pacific and 29,000 shares of the consolidated 



652 JAY GOULD. 

company's stock given in exchange, which sold at par. The 
witness was sharply questioned as to what he knew about 
Eeferee Buggies' report. He was asked if he knew who 
wrote the report, or had any knowledge as to who did. 

Q. In order to prepare the decree which was signed on 
Jan. 24, you must have had the finding before you, did you 
not? A. No. 

Q. How could you prepare it without knowing what the 
finding was, for the decree was presented the very next day ? 
A. I must withdraw that answer, and change it to yes . 

Gov. Pattison — Do I understand you to say that the stock 
which was exchanged had risen in a few days from $2 to $3 
a share to par. Mr. Holmes said that was a fact, and then 
this question was put to him : 

Q. In other words, Mr. Dillon had sworn on Jan. 17, 1880, 
that the stock had no financial value, and yet on Jan. 24 it 
was worth par. A. Yes. 

This discloses another of Mr. Gould's valuable secrets of 
the way to make money rapidly. 

gould's first yachting experience. 

There is a humorous story told of Mr. Gould's first 
yachting experience, which was recently published in the 
Philadelphia Press, and its veracity vouched for by a living 
witness to the event. It is characteristic of Mr. Gould in 
some special respects, and runs as follows : 

At the residence of a club man, whose reputation as a 
raconteur is nearly as great as that of his Burgundy, I 
noticed a pretty model of a jib and mainsail yacht. Beplying 
to my admiring inquiry the club man explained : 

" That is the model of a boat upon which were passed 
some of the sunniest hours of my life. She was owned by 
one of the Cruger family, of Cruger-on-the-Hudson, and has 
an added interest from the fact that upon her Jay Gould 
acquired his first yachting experience, and so eventful a one 
that I'll bet he remembers it to this day. 

" Crugers— one of the oldest and best known families in 
the State, intermarried as they are with other Knickerbock- 
ers like the Schuylers, Livingstons and Yan Bensselaers— 
owned all the land in the neighborhood of the station sub- 
sequently named after them. A portion of this property 



STORY OF THE JEAN OVERALLS. 653 

consisted of a brick yard, which was rented to the son of 
old Schuyler Livingston. It was in 1853 or 1854, and Jay 
Gould had just failed in the tannery business in Pennsyl- 
vania. 

"Young Livingston's leased brick yard wasn't paying, 
and he concluded that it needed a shrewd business man at 
its head. He advertised for a partner, and one day there ap- 
peared in response a small, dark gentleman, looking scrupu- 
lously neat in his black broadcloth. He gave his name as 
Jay ferould. Pending negotiations, Mr. Gould became the 
guest of the Crugers at the old mansion on the hill. Every 
effort was put forth to entertain him during his stay, the 
more as he seemed to regard favorably a partnership with 
their young friend. 

"One day Mr. Cruger invited Gould to a sail to New- 
burgh, and got ready his yacht, of which that model is the 
reduction. Several of us youngsters were taken along to 
help work the boat. Eugene Cruger, a nephew of the 
yacht's owner, was one of us. Peekskill was reached and 
the whole party went up to the hotel. 

u All the way up the river we had noticed that Mr. Gould 
was uneasy, shifting about constantly on the deck, where he 
sat, and squirming and twisting as if seeking to find a softer 
spot. Nothing was said about it, of course, but when we 
landed Mr. Gould himself furnished the explanation. From 
the heat of the sun the yellow paint on the boat's deck had 
become baked and chalky, and it was not long before the 
little man discovered that the dry powder was coming off 
on his trousers. Hence his uneasiness. He concluded by 
saying he was afraid his broadcloth nether garments would 
be, if they were not already, ruined, and was determined to 
abandon the trip and return by rail. This Mr. Cruger 
would not hear of, and promised to obviate the difficulty- 
We all adjourned to a general store and Cruger bought, for 
two shillings and a half, a pair of jean overalls. These 
Mr. Gould put on when we went aboard the boat and ex- 
pressed his unqualified satisfaction at the result. 

tl On our trip back from Newburgh we again called ai 
Peekskill, and once more the party started for the hotel 
This time Mr. Gould declined the invitation to take some 
thing and preferred to remain on board. About an hour 
was spent in the hotel, when suddenly Mr. Cruger remem- 
bered that he wanted some white lead, and young Eugene 



654 JAY GOUIyD. 

Cruger and I went with him to the store to carry it down to 
the boat. 

" ' How'd the overalls work, Mr. Cruger ? ' was the saluta- 
tion of the storekeeper. Then before answer could be 
returned, he added admiringly : ■ That friend o' yourn is 
purty shrewd.' 

" ' Who, Mr. Gould ? Yes, he appears Jto be a thorough 
business man.' 

" ' Well, I sh'd say so ! He can drive a mighty sharp bar- 
gain.' 

" l Drive a sharp bargain ? ' repeated Cruger, all at sea. 
' What do you mean ? ' 

" 4 Why, don't you know he was in here 'bout three quar- 
ters of an hour ago, and sold me back the overalls you 
bought for him.' 

" ' Thunder, no ! ' roared Cruger in astonishment. 

"'Well, sir, he jest did that. He kem in here, tole me 
he'd no fu'ther use for 'em, that they was as good as when I 
sold 'em, an' after we'd haggled awhile he 'greed ter take 
two shillin' fur 'em, which I paid him. Here's the overalls.' 

"I can shut my eyes now,'' went on the jolly club man, 
with a hearty laugh, suiting the action te the words, " and 
call up Mr. Cruger's face with its mingled expression of 
amazement and incredulity. He left the store in silence. Not 
until we had nearly reached the boat did he speak. Then 
he only said, ' Boys , I'll fix him for that % ' We reached 
home without any reference to the incident. On the way 
back Mr. Gould sat upon his pocket-handkerchief. 

"The same night Mr. Cruger perfected his plan. Next 
day Mr. Cruger proposed a fishing party. Mr. Gould declined 
to go. He had concluded, he said, not to take an interest 
in young Livingston's brickyard, and would return to the 
city on the afternoon train. A business engagement, involv- 
ing quite a sum of money, had to be kept. His host argued 
with him, but for a time to no purpose. The saturnine 
little man had a tremendous amount of determination in his 
composition. Finally a compromise was effected, it being 
agreed that he should put Gould off at a station in time 
to catch the train. That he must catch it without fail, he 
most emphatically declared. 

u The day passed on and we were off Sing Sing, when we 
saw the smoke of the coming train. We had been running 
free before the wind, but immediately Mr. Cruger, who was 



OBLIGED TO WADE OR SWIM. 655 

at the stick, shoved it down ; we hauled in on the sheets 
and headed for the Eastern shore. Mr. Gould was by this 
time on his feet, clinging to the wiodward coaming, the 
deepest anxiety pictured on his face. Just there the water 
shoals rapidly. We were within fifty feet of the shore, 
opposite the railroad depot. The time had now come for 
Mr. Gruger's revenge. 

" ' Let go the main and jib sheets ! ' he shouted. ' Down 
with your board ! ' 

"Never was order more eagerly obeyed. The sheets 
whizzed through the blocks, ready hands slipped out the 
pin and jammed down the centre-board, and in a second the 
yacht, with a grating shock and shaking sails, came to a 
stand, fast on the sandy bottom. There she was bound to 
stay until the obstructing board was lifted again. 

" * What's the matter % ' exclaimed Mr. Gould, anxiously. 
Of course he had not detected the ruse, for he knew no 
more about the working of a yacht than a sea cow does about 
differential calculus." 

" l I'm afraid we're aground,' replied Mr. Cruger, with a fine 
assumption of sadness. ' Boys, get out the sweeps and push 
her off.' 

" We struggled with the long oars in a gr°a J show of ardor, 
while Gould watched us in breathless suspense, between 
hope and fear. But as we had taken care to put the sweeps 
overboard astern, the harder we shoved the faster we stuck. 
The little man's suspicions were not in the slightest degree 
aroused and he turned in despair to Mr. Cruger. 

u ' What shall I do ! ' he almost wailed. ' I've got to catch 
that train ! ' 

" ' Then,' replied the joker, solemnly, ' you'll have to wade 
or swim.' 

"Already the train was in sight, two miles away, and 
whatever was to be done had to be done quickly. As I have 
said, there was plenty of grit in the embryo railroad king, 
and quick as a wink he was out of his sable clothes and 
standing before us clad only in his aggressively scarlet un- 
dergarments. Holding his precious broadcloth suit above 
his head, he stepped into the water, which, shallow as it was, 
reached to the armpits of the little gentleman. Then he 
started for the shore, his short, thin legs working back and 
forth in a most comical fashion as he strove to quicken his 
pace. The station platform was crowded with people, and 



656 JAY COUIyD. 

very soon the strange figure approaching them "was descried. 
A peal of laughter from 500 throats rolled over the water to 
us, the ladies hiding their blushes behind parasols and fans. 
The men shouted with laughter. Finally the wader reached 
the base of the stone wall, and for a moment covered with 
confusion — and but little else — stood upon the rock, one 
scarlet leg uplifted, looking for all the world like a flamingo 
on the shore of a Florida bayou, while the air was split with 
shrieks of laughter, in which we now unreservedly joined. 
Then came the climax of the joke, which nearly paralyzed 
the unfortunate victim. 

" Haul on your sheets, boys, and up with the board !' was 
Cruger' s order. As the yacht gathered headway and swept 
by within ten feet of the astonished Mr. Gould, we laugh- 
ingly bade him good-bye, advising a warm mustard bath 
when he got home. 

"Then his quick mind took in the full force of the prac- 
tical joke we had worked upon him and his dark face was a 
study for a painter. But the train had already reached the 
station, taken on its passengers and the wheels were begin- 
ning to turn again for its run to the city. As Gould scram- 
bled up the wall, his glossy black suit still pressed affection- 
ately to his bosom, the ' All aboard !' had sounded and the 
cars were moving. Every window was filled with laughing 
faces as he raced over the sand and stones and was dragged 
by two brakemen on to the rear platform, panting and drip- 
ping. The last glimpse we caught of him was as the train 
entered the prison tunnel. Then, supported on either side 
by the railroad men, he was making frantic plunges in his 
efforts to thrust his streaming legs into his trousers as the 
platform reeled and rocked beneath him." 

u Did he ever return Mr. Cruger the two shillings ?" the 
writer inquired. 

"Return the two shillings !" echoed the club man. For a 
moment he was silent. Then, as a retrospective gleam crept 
into his eyes, he slowly shook his head and, with seeming 
irrelevancy, said : 

" I — guess — you — are — not — very — well — acquainted — 
with — Mr. — Jay— Gould." 

The above story was submitted to Mr. Eugene Cruger at 
his residence, No. 1211 Livingston Avenue, together with the 
inquiry as to its accuracy. Mr. Cruger made the following 
rep]y : " I must say that I can't imagine who can have fur- 



RECENT SPECULATIVE EXPLOITS. 657 

nished these particulars, for most of those who took part in 
the incidents related have gone forever. Whoever the in- 
formant may be, however, it cannot be denied that you have 
received a true account of what occurred. I enjoyed the af- 
fair at that period, but time has softened things and the 
recollection is not without its unpleasant side." 

The success of Mr. Gould in securing the Baltimore and 
Ohio Telegraph to be consolidated with Western Union, has 
placed him at the head of the greatest telegraph monopoly 
in the world, practically beyond competition. It remains to 
be seen whether or not Congress will take any action to- 
wards the creation of a Government telegraph that will 
afford a guarantee of protection against extortionate rates. 
It is true that Western Union has lowered its rates, but 
this is generally regarded as a conciliatory move of a tem- 
porary character on the part of Mr. Gould for the pur- 
pose of showing that Government telegraphy is noi a 
necessity, and that as soon as the attention of Congress is 
turned away from the question rates will go up again. 

While I should not approve of the Government going so 
far as to condemn Western Union property, and making a 
purchase thereof on an appraised valuation, still I do be- 
lieve that proper Congressional action should be taken to 
provide supervision and protective control over the tele- 
graphic communication throughout the country. My idea 
is that the Government should interfere rather as a regulator 
than an owner, being careful to avoid everything that could 
be construed into monopoly on its own part, any more than 
in connection with our railroad system. 

Mr. Gould went to Europe late in the fall, and visited 
several places there ostensibly for health, pleasure, and re- 
creation. What his secret and ultimate designs may be has 
not yet transpired, although they have been a leading topic 
of much conjecture among financiers and Wall Street mag- 
nates since his arrival on the other side. One of the best 
things got off on this subject was, that when Mr. Gould sent 
in his card to one of the Bothschilds, the latter requested 



658 JAY GOULD. 

the messenger to inform the gentleman that Europe was not 
for sale. 

He returned about the end of March to find some of his 
railroads, especially in Missouri Pacific system, in a some- 
what crippled condition. 

With a feeling of deep humility that I have made many 
important omissions in Mr. Gould's variegated career, 
although I have surrendered all the space to him that I can, 
very well afford, I now beg to take my leave of him, at least 
^o far as the present edition is concerned. 





Mmtu£u). 



CHAPTEK LIX. 

MEN OF MARK. 

Cyrus W. Field— Hon. Stephen V. White— Austin Corbin 
— Philip D. Armour — Hon. Levi P. Morton — John A. 
Stewart — Anthony J. Drexel — The Jerome Brothers 
— Addison Cammack — Eussell Sage— Chauncey M. 
Depew — James M. Brown — Stedman the poet — Victor 
H. Newcombe— Moses Taylor — Former Giants 
of the Street— Henry Keep— Anthony W. Morse. 

Cyrus W. Field. 

CYBUS W. FIELD has been termed a locomotive in 
trousers. The simile illustrates the indefatigable energy 
of the man. His indomitable resolution and his energy of 
character have placed him high among the distinguished 
men of the age. He was born at Stockbridge, Mass., in 1819. 
His father was a clergyman. At fifteen years of age, Cyrus 
W. Field came to New York with a trifling sum in his 
pocket. For three years he was in the employ of A. T. 
Stewart, the dry goods merchant, and then went to Lee, 
Mass., to work in his brother's paper mill. Two years later 
he became a partner in the paper firm of E. Boot & Co., in 
Maiden Lane, but the co-partnership was not successful. 
Later on he again went into the paper business, and by 1853 
had acquired a competence, whereupon he partially with- 
drew from mercantile pursuits, and his health having failed 
he took a trip to South America. He was about to with- 
draw entirely from business, when he was induced, with 
considerable difficulty, to look into a project for laying a 
telegraphic cable to England. Frederick N- Gisbourne had 
interested Matthew D. Field, a civil engineer, and a brother 
of Cyrus W. Field, in a project for establishing a telegraph 
line between NewYork and St. John's, Newfoundland, partly 
on poles, partly under ground, and partly under water. At 



660 MEN OF MARK. 

St. John's, the fastest steamers ever built were to sail for 
Ireland, and the time between the two countries was to be 
shortened to six days or less. A company had attempted 
to carry out this project, and had become bankrupt. The 
idea was un-American ; it was unsatisfactory ; much quicker 
communication was needed. It was not till Mr. Field con- 
ceived the idea of laying a cable direct from Newfoundland 
to Ireland, that he became really interested in the enter- 
prise. He was assured by high scientific authority that the 
idea could be carried out. In March, 1854, Mr. Field went 
to St. John's, Newfoundland, and obtained from the legis- 
lature a charter, granting an exclusive right for fifty years, 
to establish a telegraph line from the Continent of America 
to Newfoundland and thence to Europe. Then, with con- 
siderable difficulty, he obtained in New^ York subscriptions 
amounting to $1,500,000, which he thought would be suffi- 
cient. The line really cost $1,834,500, being more than 
2,600 miles long. His first attempt failed in 1857. Ee 
succeeded in the following year, and then the cable became 
silent, and the incredulous public thought that this would 
end all attempts to do something that seemed miraculous. 
For seven years no attempt was made to lay a cable, as the 
Civil War intervened, but in 1865 Mr. Field again took up 
the enterprise, in which he had never lost faith. By this time 
sub-marine telegraphy had been greatly improved, a better 
cable was constructed, and a better machine for laying it 
was invented. The famous steamer Grreat Eastern took the 
cable, but after going some 1,200 miles, the great vessel 
gave a lurch that broke the cable and an attempt to grapple 
it was unsuccessful. In 1866, however, a cable was success- 
fully laid. A private citizen seldom receives such honors 
as was showered on Mr. Field, in 1866, when Europe and 
America realized that largely through the exertions of one 
man, they were joined by the Atlantic cable. He had 
pushed a vast project to a successful consummation in spite 
of incredulity, ridicule, indifference and strenuous opposi- 




^^iitif J /ri^i^^iM. — 



CONNECTING TWO CONTINENTS. 661 

tion. Peter the Hermit did not preach the crusade with 
more fervor and enthusiasm than this priest of commerce, so 
to speak, advocated the great work with which history will 
always link his name. If any one had, a few centuries 
ago, ventured to predict that the day would come when 
there would be six or seven cable telegraphs stretched 
along the ocean bed between America and Europe — 
along dim prehistoric valleys, four miles under water and 
over great sub-marine mountains — by means of which a 
message could be sent nearly three thousand miles and an 
answer received in thirty seconds]; he would have been in 
danger of incarceration as a lunatic, or even of death on the 
scaffold or at the stake. This daring utilitarian age, how- 
ever, has grown accustomed to startling exhibitions of human 
ingenuity. Mr. Field owns considerable Western Union 
stock, and is interested in a number of railroads, including 
the Manhattan Elevated. He owns one-fifth of the stock of 
the Acadia Coal Co., is a special partner in the grain firm of 
Field, Lindley & Co., and owns the Mail and Express, one of 
the great papers of the metropolis. He has a house in 
Gramercy Park and a fine mansion at Irvington on an es- 
tate of about 500 acres. He is a large owner of real estate 
in that very pleasant section, owning some 56 houses be- 
sides considerable land. He is fully six feet in height, of 
light complexion, with penetrating, bluish-gray eyes, which 
peer sharply into those of an interlocutor. The nose is 
prominent, the brows knit with years of thought, the mouth 
and jaw indicate great decision of character. He is a man 
of courtly manners and exceptional abilities. 

Hon. Stephen V. White. 

Hon. Stephen V. White is a short, compactly built, dark- 
complexioned man of 54. In manners he is courteous and 
unassuming ; in business methods lie is quick and straightfor- 
ward. He is a Director in the Western Union and the Lack- 
awanna road. He is a bold, dashing operator in stocks, and 



662 MJSN OF MARK- 

in Wall street has met with considerable success. One of 
his greatest favorites is Lackawanna. He expects to see it 
some day go to 200. He has several times badly squeezed 
the shorts in that stock, and, now that he has practically de- 
monstrated what they ought to have known before, namely, 
that the stock can easily be cornered, the bears are apt to 
fight shy of it. He has a large clientele, and, being a natural 
leader, he has plenty of followers in his speculative cam- 
paigns. He was born in North Carolina. He was gradu- 
ated from Knox College at Galesburg, Illinois. He studied 
law in the office of the Hon. John J. Kasson, afterward 
United States Minister to Germany. He drifted to St. Louis, 
and there became a reporter for the Missouri Democrat. He 
went to Des Moines, practised law for nine years, and was 
elected a Judge. He came to New York, and for a time 
practised law, but soon became a stock broker as well. He 
still occasionally appears as counsel in the Federal Courts, 
and sometimes in the Supreme Court of the United States. 
He is a ready and forcible speaker, full of vim and fire. He 
was a warm personal friend of the late Henry Ward Beecher, 
the grand old Chrysostom of the nineteenth century, who 
has left the world brighter for his memory and darker for 
his absence. In the frank, keen, practical financier and 
lawyer, and the great, warm hearted preacher, glowing with 
fervid idealism and generous enthusiasm and high aspira- 
tions for the human race, there were kindred qualities that 
made them friends. Mr. White, in 1886, was elected to Con- 
gress from Brooklyn, where he resides. He is scholarly in 
his tastes, well versed in the classics, and is especially fond 
of astronomy, for the study of which he has a fine observa- 
vatory in his palatial home. He is popular in Wall street. 

Austin Corbin. 

Within a year Austin Corbin has become a prominent 
figure in the financial world, winning wide business celebrity 
by his identification with the reorganization of the Reading 




«=z? 



A HIGHLY PROSPEROUS CAREER. 663 

Kailroad. He is by nature the reverse of an iconoclast, 
namely, a builder up. He would construct rather than de- 
stroy. He would save a property if it were at all possible, 
and in pulling that poor, tired, financial pilgrim Beading 
out of the slough of despond, and in directing its way tow- 
ard a primrose path of prosperity, he is engaged in a con- 
genial task. He is about 58 years of age, and was born in 
Newport, New Hampshire. He studied law, and was gradu- 
ated from the Havard Law School. For a time he practised 
law in his native town as a partner of Ex-Governor Metcalf, 
of New Hampshire, but in 1851 he went to Davenport, Iowa. 
There he really organized the first national bank under 
the new system, which was to prove of such incalculable 
financial benefit to the nation. Mr. Corbin made the first 
application under the new law, but it happened to be faulty 
in some minor technicalities, and before their trivialities 
could be corrected four other national banks were organized, 
so that his bank became number five under the new system. 
He came to New York in 1865, and established a banking- 
house here. He is President of the Reading, Long Island, 
Indiana, Bloomington & Western, Elmira, Cortland & 
Northern, and Manhattan Beach Bailroads. He is a mem 
ber of the Union League, Manhattan and Saturday Night 
Clubs of New York, the Somerset Club of Boston, and the 
Conservative Club of London. He is a man of strict prob- 
ity, genial in his manners, and deservedly held in high 
esteem. 

Philip D. Abmoue. 

Philip D. Armour was born in a little village near Water- 
town in the interior of New York State, in 1832. He is 
powerfully built, with broad shoulders, a large head and 
firm, square features and light gray eyes, that never seem 
excited or disturbed. His manners are quiet, composed and 
courteous. In 1849, leaving his native village, he went to 
California. He crossed the plains with a six-mule team 



664: MEN OF MARK. 

which he drove himself. He worked for a few years in the 
gold fields, accumulated a little capital, and in 1855 went to 
Milwaukee and engaged in the grain and warehouse 
business. He prospered moderately but steadily. Then he 
thought of going into the lumber business, but bought an in- 
terest in the pork packing establishment of Layton & Plank- 
ington, the former retiring. At this time he was worth half 
a million. He soon increased this three fold. In the war, 
provisions were very high, but when Gen. Grant was closing 
in on the Confederacy for the final struggle that could only 
end in the triumph of the North, Mr. Armour saw that 
prices must come down with the Confederacy. He came at 
once to New York and began to sell pork short. He began 
te sell at $40 a barrel. He covered at $18 and netted, it is 
said, nearly two million dollars. He now enlarged his 
business, established new packing houses in Chicago and 
Kansas City as well as agencies all over the world. He has 
sold sixty million dollars' worth of food products in a year. 
He has five thousand names on his pay roll. He has 
cornered pork three times within recent years, and in 1880 
made, it is said, three millions in punishing bears who tried 
to sell the market down . A campaign against the bears in 
pork or meats he calls protecting his cellars. Those cellars 
are well protected. No bearish Ali Baba has the pass -word 
to go in and plunder them, and the number of cinnamons 
and grizzlies, big and little, who have licked their paws in rue- 
ful remembrance of the attempt are not a few. He has made 
millions in successful grain speculations. He invested four 
millions in St. Paul stock, buying it outright. He is now 
one of the recognized financial leaders of the country, as 
aggressive as a Wellington at the proper time and cautious 
as a Fabius when caution is the watchword of wisdom. He 
lives in a plain house on Prairie Avenue in Chicago, and is 
himself a man devoid of ostentation. He works from 7 A. 
M. till 6 P. M. His fortune is estimated at fifteen millions 
of dollars, 



HON. I,EVI P. MORTON. 665 

Hon. Levi P. Morton received his business training in the 
dry goods trade. Then he became a banker. He has a 
national reputation as a financier. He is shrewd, genial 
and successful. President Garfield made him Minister to 
France. He had previously done good service as a member 
of Congress. He is now in his sixty-third year. He is 
a lineal descendant of George Morton, one of the Pil- 
grim Fathers who came to this country in 1623. Mr. 
Morton was born in the State of New Hampshire. At 20 
he became a clerk in a country store. He had to shift 
for himself. Necessity is the stimulus that men of real 
ability require. He stayed five years in the obscure New 
Hamshire village and then went to Boston, where he ulti- 
mately engaged in business. But New York attracted him. 
He embarked in the dry goods business here and went into 
banking afterwards, and soon laid the broad foundations for 
the successful firms of Morton, Bliss & Co., of New York, and 
Morton, Eose & Co., of London. His Congressional and 
diplomatic laurels followed. He filled the French Mission 
with great satisfaction to the French people as well as those 
of the American traveling public, as he was a free and gen- 
erous entertainer. His large fortune has been amassed 
since he came to Wall Street. He has a fine villa at New- 
port and also one on the Hudson. 

John A. Stewart. 

John A. Stewart is President, of the United States Trust 
Company, one of the largest banking and trust corporations 
in America. Its deposits are over forty millions of dollars. 
Its great success is largely due to the able management of 
President Stewart, who has in fact shown marvellous ability 
in the management of large financial interests. Mr. Stewart 
during the war period was urged by Secretary Chase to 
become Sub-Treasurer of the United States in this city, and 
he finally consented to take the position, although at a great 



66Q MEN OF MARK. 

personal sacrifice, being actuated solely by a patriotic spirit. 
He is one of the financial lights of the metropolis, and is 
respected for his financial acumen and his sterling qualities 
as a man. 

Anthony J. Drexel. 
Anthony J. Drexel is the head of the house of Drexel & 
Co. in Philadelphia and Drexel, Morgan & Co. in New York. 
The house was founded by Joseph Drexel, who emigrated to 
this country from Germany early in the present century, and 
began business in Philadelphia in a small way as a sort of 
exchange broker. When the California gold fever broke 
out he made connections with parties in San Francisco and 
received large amounts of gold. In these transactions he 
got his first great start. The returns from the exchange 
were large. v As his means increased he gradually extended 
his business, and finally, by thrift and diligent attention to 
business, he accumulated quite a snug fortune. In the end 
he built up a successful banking business, in which his sons 
became interested, and at his death inherited his wealth and 
the business. The elder brother died a few years ago, leav- 
ing ten million dollars to his family and to various chari- 
ties. Anthony Drexel, the present head of this signally 
successful firm, is 55 years of age, and is a man of excellent 
business capacity. He is one of the successful business 
men of the United States. 

The Jerome Brothers. 

Addison Jerome, who died some years ago, was a gigantic 
operator in his day, and displayed great ability in the con- 
duct of speculative campaigns, but he went beyond his 
depth and disaster followed. Like many others in Wall 
Street, he gained his business education in the dry goods 
trade. He met with one of his greatest reverses in his 
attempt to corner Lake Shore. Others followed, one after 
another, and the end was financial shipwreck. 




ANTHONY J. DREXEL. 



A GREAT SPECULATIVE CAREER. 6&t 

At this time his brother, Leonard W. Jerome, was one of 
the foremost men of Wall street and was a partner of Wm. 
R. Travers, the firm name being Travers & Jerome. Leonard 
Jerome is splendidly built and nearly six feet in height. His 
ancestors were Huguenots. He was born in Pompey, Onon- 
daga county, New York. His grandfather was a Presby- 
terian clergyman. At 14 Leonard was sent to Princeton 
College and was graduated with credit. He then spent 
three years reading law in Albany, and at 22 was admitted 
to the bar. He practiced law with his uncle, Judge Jerome, of 
Eochester. Afterward with his brother Lawrence he estab- 
lished a newspaper, called the Rochester Native American, and 
he made a good editor. President Filmore appointed him 
Consul at Trieste. He came to Wall Street in 1854. His 
first operation was in putting up all he could spare, about 
two thousand dollars, as margin on five hundred shares of 
Cleveland and Toledo stock, one of the old-time speculative 
favorites. He bought it on a sure point from the treasurer 
of the road. He bought. The treasurer sold. Result: 
The stock fell, and Jerome lost all his spare funds. He was 
not discouraged. He studied Wall Street tactics, and in 
the end he made the treasurer pay dearly for his former 
success in spearing a lamb. He invested $500 in buying 
calls and made §5,000 within thirty days. He became a 
partner of William R. Travers. They were very successful 
on the short side of the market. He was to meet with some 
reverses, however. In 1862 the agent of the State of Indi- 
ana, in a manner that would have deceived the very elect, 
through an unauthorized issue of Indiana 5 per cent, bonds, 
swindled him out of $600,000 by the hypothecation of the 
bonds. The State repudiated the acts of its agent, and as 
an individual is not allowed to sue a State, Mr. Jerome was 
robbed of the money. Still another reverse was met in 
Pacific Mail. When the capital stock was increased to 
$20,000,000 he took 50,000 shares at 200. The price ad- 
vanced soon thereafter to 243, and he sold a part of his 



668 MEN OF MARK. 

stock, but kept a large block of it on account of bis faith in 
its value. At the next quarterly meeting of the Board of 
Directors, however, it was decided by a majority of one, five 
directors being present, to reduce the dividend from five to 
three per cent. The street was thunderstruck at the audac- 
ity of this move ; the market broke, and in two hours Mr. 
Jerome's stock depreciated $800,000. Still he made large 
gains in Pacific Mail as well as big [losses. He left Wall 
Street years ago with an ample fortune. He went there 
with next to nothing, and in spite of reverses, came out a 
substantial victor in the financial tourney. In the war he 
was always enthusiastic in his devotion to the cause of the 
North, and subscribed with princely liberality to aid patri- 
otic movements. When the first great Union meeting was 
held at the Academy of Music he paid all the expenses. He 
was Treasurer of the Union Defense Committee, and he 
likewise paid all of its incidental expenses. He was the 
most liberal in his contributions and the most devoted in 
his allegiance to the Government in its darkest and gloom- 
iest hours. He was the founder of the fund for the benefit 
of the families of those who were killed or wounded in the 
New York riots of 1863, growing out of the draft. His 
checks for $10,000 and more to aid the Union arms were 
frequent ; he contributed $35,000 toward the construction of 
the "Meteor," a war vessel built to destroy the famous 
"Alabama" of the Confederacy. During the war Mr. 
Jerome purchased and held for some years the largest inter- 
est in the New York Times, then edited by the great war 
editor, Henry J. Raymond, an old friend of Mr. Jerome's. 
Like Mr. Travers, his early partner, Mr. Jerome has done 
much to encourage all out-of-door sports, especially on the 
race course. He established the Jerome Park Jockey Club, 
and became half owner in a famous speed horse which cost 
$40,000. No one has done more to improve the breed of 
blooded horses in this country than Mr. Jerome. He has 
also been prominent in yachting. He first owned the 




>-wp£ 



A PATRON OF ART AND THF, TURF. 669 

"Undine"; then, with Commodore McVickar, he bought the 
" Eestless," and still later, with Commodore James Gordon 
Bennett, the "Dauntless." He paid $125,000 for the steam 
yacht "Clara Clarita," which proved a failure, and since 
then he has not been so enthusiastic a yachtsman as for- 
merly. He made $45,000 on the great ocean yacht race of 
1866. He had much to do with introducing the taste for 
four-in-hands in this country. He has been a liberal patron 
of American art in all its branches. He paid for the musi- 
cal education of a number of well-known singers, whose 
voices were trained in the best Italian schools. His social 
position has always been high, but it has been still further 
promoted by the marriages of his beautiful daughters. The 
elder, Clara, is married to Mr. Morton Frewen, a member of 
an old English family which long represented their shire in 
Parliament. Another, Leoni, married Mr. John Leslie of 
the Guards, and son and heir of Sir John Leslie ; while 
Jennie married Lord Randolph Churchill, the notable but 
erratic statesman. Leonard W. Jerome, whose history I 
have followed somewhat minutely, is one of the best-hearted 
men that Wall Street ever knew. The more he made the 
more he gave. He was liberal to a fault. He was never 
happy but when making others happy. He was a Sir Philip 
Sidney of chivalry and peerless generosity — a man in whom 
the warmest and most ingratiating traits of human nature 
were as natural as the winning sunniness of his disposition 
and the courage which once made him one of the great glad- 
iators in the arena of Wall Street. Both he and his brother 
Lawrence are old members of the Union Club. Lawrence 
was formerly a stock broker. He had his ups and downs, 
and withdrew from Wall Street several years ago. He sold 
his seat in the Stock Exchange and placed the proceeds 
about $30,000, in an annuity which insures him about $4,000 
a year for the remainder of his life. This, with his other 
income, places him in easy circumstances and preserves his 
naturally cheerful disposition, rendering him one of the 



670 M ^N OF MARK, 

most companionable men in the city. He is about five feet 
ten inches in height, stout and of light complexion. Since 
the death of his old friend, Wm. E. Travers, to whom he 
was as Damon to Pythias, he stands pre-eminent among the 
wits of New York. He is the prince of metropolitan wags 
and wits. His friends are legion. The great, genial, warm 
hearted, boyish Larry Jerome, as his friends love to call 
him, is literally a man without an enemy, and long may he 
live to brighten society with his happy exuberance of spirits, 
his scintillating humor and his brilliant wit. 

Addison Cammack. 

Addison Cammack is about sixty years of age and was 
loom in Hopkinsville, Kentucky. He was reared in com- 
fortable but humble circumstances. Early in life he began 
his business career as a clerk in the house of J. P. Whitney 
& Co., then the largest ship brokers in New Orleans. He 
showed decided business talent, and ultimately became a 
partner in the firm. In the early part of the Civil War he 
was located in Havana, but in 1863 he went to London and 
and engaged in business and speculation there. He returned 
to this country in two years, and in 1866 embarked in the 
wholesale liquor business in New York with J. W. George, 
the firm being J. W. George & Co. In about two years the 
firm was dissolved and Mr. Cammack became a member of 
the Stock Exchange, having previously formed a co-partner- 
ship with the late Chas. J. Osborn, under the name of 
Osborn & Cammack. This co-partnership, after some years 
of great prosperity, was dissolved, and since then Mr. Cam- 
mack has been an operator on his own account. In this 
capacity he has become widely known. He is a shrewd 
operator, and quickly changes his mind if he thinks he has 
been wrong. He jumps from one side of the market to the 
other with the greatest celerity when occasion demands it, 
but in the main he seems most at home on the bear side. In 
bear operations he has met with some reverses, while in this 




LW% 



THE KING OF "PUTS " AND " CAIJ^." 671 

direction he has also made millions. He seems to place 
great faith inBenner's book of "Financial Prophecies." At 
times he operates on a very large scale, and he has been 
known to cover fifty thousand shares of stock in a single 
day. He is tall, well built, and has strong features, with 
keen, gray eyes. In manners he is very democratic and 
candid, and occasionally somewhatHbluff ; but he is a man of 
generous impulses, very charitable, and has plenty of friends, 
both for his financial acumen and for his qualities as a man 
who never deserts his friends, and who has not a few of the 
characteristics of mediaeval chivalry joined to the shrewd 
practicality of a great stock operator of this practical epoch. 

Eussell Sage. 
Eussell Sage is one of the best known of Wall Street 
celebrities. He was born seventy years ago in Oneida 
county, of this State. As a boy, he was employed in a 
country general store, beginning life in this fashion at 14. 
His business aptitude early manifested itself, and at 20 he 
bought out his employer in Troy, to which he had in the 
meantime removed. He became later on a member of the 
Troy Board of Aldermen, served seven years, and was then 
elected Treasurer. Still later he was elected to Congress, 
serving from 1853 to 1857. He started the project of pur- 
chasing Mount Vernon and making it a national domain, 
and took great pride in the success which attended his 
efforts in this direction. While in Congress he became con- 
nected with the Pacific Mail Steamship Company, and later 
Vice-President of the Chicago, Milwaukee & St. Paul, also 
for a time its acting president. He is now a director in the 
Gould telegraph and railroad systems, is interested in a 
number of trust companies and is also said to own a large 
amount of stock in the Importers' and Traders' Bank. He 
is the king of puts and calls. He has usually been success- 
ful in writing privileges, but in the summer of 1884, when 
the market broke so badly as to produce a panic, Mr. Sage 



672 MEN OF MARK. 

met with a decided reverse. He had sold a large number of 
puts, and the loss was several million dollars. He is known 
as, in one sense, the largest capitalist of Wall Street, inas- 
much as he keeps the largest cash balance. It runs far up 
in the millions, giving him quick resources with which to 
carry out any project that may seem desirable. He is quiet 
and simple in his habits, making no display. He lives on 
Fifth Avenue, and also has a place at Babylon, Long Island, 
He is worth about twenty millions. He is tall, light com- 
plexioned, with keen, gray eyes, and in Wall Street might be 
taken for a country gentleman seeing the sights. 

Chauncey M. Depew. 

Chauncey M. Depew owes his rise to native abilities and 
the friendship of the Vanderbilt family, which he has thor- 
oughly merited. He made the acquaintance of Wm. H. 
Vanderbilt about the year 1866 and became the attorney of 
the New York and Harlem Railroad. On the union of the 
New York Central and Harlem roads, in 1869, he was ap- 
pointed attorney of the consolidated company, and in 1875 
he was made general counsel. A few years previous he had 
been elected director of the New York Central road, and 
subsequently became a director in the Chicago and North- 
western, Michigan Central, St. Paul and Omaha, the Lake 
Shore and the Nickel Plate. In 1882 he was elected second 
vice-president of the New York Central, and in 1S85 suc- 
ceeded Mr. Rutter as president of that great railroad. He 
was born in Peekskill in 1834, and comes of an old French 
Huguenot family. He still owns the homestead purchased 
two hundred years ago by his ancestors. His mother is a 
descendant of the brother of Roger Sherman, of revolution- 
ary fame. Mr. Depew was graduated from Yale College in 
1856, and three years later was admitted to the bar. In 
1862 he was elected to the New York Assembly and acted as 
Chairman of the Committee of Ways and Means and part 
of the time as Speaker. In 1863, the year after Gv >vernor 



STATESMAN, WIT, SCHOLAR AND FINANCIER. 673 

Seymour's election, Mr. Depew was a candidate for Secretary 
of State on the Eepublican ticket, overcame the Democratic 
ascendancy, and was elected by about thirty thousand votes. 
He declined re-election and was appointed Minister to Japan 
by Secretary Seward. He held the post several years, and 
resigned it to resume business. His commission as Collector 
of the Port of New York was once made out by President 
Johnson, but in consequence of Senator E. D. Morgan's re- 
fusal to sustain Mr. Johnson's veto of the Civil Eights bill 
the President never sent the nomination to the Senate, but 
tore it up in a rage. In 1872 Mr. Depew was a candidate 
for Lieutenant-Governor of New York on the Liberal- 
Kepublican ticket, and was defeated. Two years later the 
Legislature elected him Eegent of the State University. 
He served one year as one of the Commissioners to build 
the new Capitol at Albany. In the memorable contest for 
the United States Senatorship in 1881, Mr. Depew for 
eighty-two days received the votes of three- fourths of the 
Eepublican members, retiring then to ensure the election 
of Warner Miller. Mr. Depew is President of the Union 
League and a member of many other clubs and societies, 
and is very popular wherever he is known. He is one of 
the wittiest and readiest after-dinner speakers in this coun- 
try, and when occasion requires, rises to the height of a born 
orator. His tastes seem to be those of a statesman and a 
scholar rather than those of a financier in the ordinary 
acceptation of the term, but his conservative and able ad- 
ministration of his office as President of one of the greatest 
trunk lines in this country, reveals a thorough apprehension 
of railroad problems and a natural capacity for whatever 
duties may be imposed upon him. His great versatility is 
exemplified by the fact that he has succeeded in law, poli- 
ticts and railroad management. 

James M. Beown. 
James M. Brown, the banker, was born in New York city, 
and is about 65 years of age. He is ex-President of the Cham- 



674 MEN OF MARK. 

ber of Commerce, and is held in general esteem and respect. 
The house of Brown Bros. & Co., in which he is now the 
senior member, has an interesting history. Early in the 
present century Alexander Brown came from Belfast, Ire- 
land, to this country, and settled in Baltimore, where he en- 
gaged in the dry goods business under the firm name of 
Alexander Brown & Sons. Subsequently the firm comprised 
five sons of Alexander Brown. The business of the dry 
goods firm prospered, and branch houses were established 
in Philadelphia, New York and Liverpool, a son going to 
each of these cities to represent the parent house in Balti- 
more. In New York and Philadelphia the style of the firm 
was Brown Brothers & Co., as the father had died in the 
meantime. In Liverpool they associated with them Mr. 
Shipley, and the firm there was Brown, Shipley & Co. 
xlnother house was established in London later on under the 
same title as the Liverpool firm. All the houses were still 
engaged in the dry goods trade. Here in New York, in 
which we are more particularly interested, the firm made ad- 
vances on cotton, and received linens from abroad, and also 
orders to buy cotton for Liverpool. Gradually the house 
began to make larger advances to planters and others en- 
gaged in the cotton trade, and finally the banking business 
became so large as to swallow up the dry goods trade and 
the house thereupon dropped merchandise and became 
bankers. Later on a branch house was established in Bos- 
ton, and at times it has had branch houses in New Orleans, 
Mobile, Galveston, Savannah and Charleston conducted 
under the name of the parent firm. At present it has 
houses in London, Liverpool, New York, Philadelphia, 
Boston, Baltimore and New Orleans. All of the original 
Brown brothers are dead. James M. Brown is a near rela- 
tive of James Brown, whose picture appears, and who was 
the original head of the house in New York. James M. 
Brown did not enter the house in his youth. He was for 
years the senior member of the dry goods house of Brown, 



A VERSATILE GENIUS. 675 

Seaver & Dunbar. On the dissolution of this firm James M. 
Brown became a partner in the house of which, by reason of 
bis years and large experience, he may be considered the 
bead. The other partners here are Howard Potter, John 
Crosby Brown, Charles D. Dickey, Waldron Post Brown, a 
son of James M. Brown, and W. F. Halsey. The New York 
partners are interested in the branch houses in this country 
and abroad. James M. Brown was a member of the famous 
Committee of Seventy which contributed to the downfall of 
the Tweed Eing in this city. He is of the medium height 
and florid complexion, well preserved, genial in manners, 
and is a man of high character. 

Stedman, the Poet and Financieb. 

A small, slightly built gentleman with iron gray side 
whiskers, a refined face and expressive gray eyes, is one of 
the notable figures in Wall street. It is Edmund Clarence 
Stedman, the banker poet. He was born in a small town in 
Connecticut in 1833, studied at Yale, entered journalism in 
1852, came to New York in 1855, and soon began to contri- 
bute poems to the New York Tribune. He became a war 
correspondent for the World on the outbreak of the rebellion, 
and continued in this capacity till 1863. In that year *ie 
became private secretary to Attorney-General Bates at 
Washington. Meantime he studied law, and contributed to 
the Atlantic Monthly and other leading magazines. As a 
poet, he holds high rank ; as a writer of polished, graceful 
prose he has few equals ; as a thorough gentleman and a 
scrupulous man of business he is held in the highest respect. 
Through the imprudence of another he has within a few 
years met with some financial reverses, which he met 
courageously and honorably, and he is now well on his way 
towards his former position of financial ease. Although a 
poet, he understands Wall street business thoroughly, and is 
considered a keen judge of financial opportunities. 



676 MEN OF MARK. 

Victor H. Newcomb was born in Louisville, Kentucky, 
about 48 years ago. His father was President of the Louis- 
ville & Nashville Eailroad, and the son succeeded the 
father in that position. The elder Newcombe was a financial 
power in Kentucky. He was sagacious and far-seeing. In 
every respect, he was an excellent business man. Victor 
Newcomb has fallen heir to his father's laurels and is a suc- 
cessful operator in Wall Street. He has achieved signal 
success in most of the campaigns in which he has engaged 
whether on the bull or the bear side of the market. He is 
cautious, and turns quickly when he thinks there is occasion. 
He seems to act on the French saying, that " only a fool 
never changes his mind." He lives in fine style on Fifth 
avenue, and also has a beautiful residence at Elberon. He 
is one of a number of prominent gentlemen from the South 
who have enrolled themselves among the citizens and tax- 
payers of New York. He is an ex-director in the New 
York & New England road, and a prominent member of the 
Union and Tuxedo Park Clubs. 

Moses Tayloe. 

Moses Taylor, now deceased, was one of the notable 
figures in Wall Street life for many years. He started as a 
South street merchant, after having been a clerk with G. G. 
& S. Howland. Wm. H. Aspinwall was also a clerk with 
that house at the same time. When Mr. Taylor gave up his 
situation to embark in business for himself, Mr. Aspinwall 
was admitted into the Howland firm as a junior partner. 
Moses Taylor was a man governed largely by intuition. 
There was little argument ; with him, so to speak, it was a 
word and a blow. Having formed his impression and taken his 
quick resolution, there was no length to which he would not 
go in the transaction, either in buying or selling or advanc- 
ing money. He was President of the City Bank and owned 
a large amount of its stock. Under his administration the 
bank was wonderfully successful. His son-in-law Percy E. 



HE MAKES MIWJONS IN LACKAWANNA. GT 7 

Pyne, is now its President. Moses Taylor was a valuable 
aid to the Union cause during the war. He was a close 
friend of Secretary Chase, and whenever the Government 
needed the assistance of the banks, the Secretary's influence 
with the great merchant speedily brought about the desired 
result. Moses Taylor realized the fact that the support of 
the Government by the entire banking system was an im- 
perative necessity. The presidents of the banks would be 
called together on one of these appeals from the Secretary 
of the Treasury, and whatever action Mr. Taylor favored 
would be adopted, so strong was his influence, and so high 
his standing as a merchant and financier. He accumulated 
wealth very fast in connection with the sugar branch of his 
business. Most of the large sugar planters consigned their 
product to his firm, and they were also governed by his 
superior judgment in investing their money, so that he 
always had important connections with Wall Street, a fact 
that entitles him to a place in this book. While investing 
millions for Cuban capitalists, he also invested very largely 
for himself. Moses Taylor was the first to discover the 
value of the Delaware, Lackawanna & Western Coal pro- 
perty, and while the stock was kicked about Wall Street, be- 
cause the company was bankrupt, he picked it up at a few 
cents on the dollar, and made millions of dollars from this 
investment alone. At his death he was one of the largest 
owners of the stock, as his faith in it was so strong that he 
had refused to sell it, even though the price had risen above 
140. He died worth at least forty millions of dollars. He 
had no social aspirations, and no interest in anything but 
business. It was his idol. Few men have been harder 
workers from early in life up to their last days. He never 
felt that he could spare time for recreation, and was seldom 
known during his long business career to leave the city 
over night, summer or winter, except on business. Moses 
Taylor had for partners in his business his son-in-law 
Percy K. Pyne and Lawrence Turnure, both excellent business 



678 MEN OF MARK. 

men, and Mr. Taylor owed much of his success to the 
selection of these gentlemen to aid in the management of 
his affairs. Mr. Taylor placed in the hands of these two 
gentlemen, especially during the last ten years of his life, 
the laboring oar of his vast business, and the successful re- 
sults are the evidence of their sagacity and marvellous 
ability. 

Anthony W. Mobse. 

Anthony W. Morse was once one of the remarkable men 
of Wall Street. He made $150,000 in speculation, bought a 
yacht and went to Europe during the war. While in Eng- 
land, he mingled with the aristocracy, and became strongly 
imbued with the idea that the North would not be successful 
in the war, and that the National currency would become 
almost valueless. He thought that the more the National cur- 
rency depreciated, the more railroad stocks and bonds would 
advance ; in short, that whatever the currency would buy 
would advance, while the currency itself would become nearly 
worthless. He therefore became a rampant bull on stocks. He 
bought] almost the whole list, and also did a large business in 
buying for others whom he succeeded in impressing with his 
own ideas. He had many followers and made a tremendous 
inflation. Secretary of the Treasury Chase was advised 
of this Morse speculation, which might prove prejudicial to 
the National credit, and he. announced that if the inflation 
was carried any further, he would prick the bubble by sell- 
ing gold. Anthony W. Morse thereupon personally sent 
Secretary Chase a dispatch saying that he would take all 
the gold that the United States Government had to sell. 
Mr. Chase immediately ordered Assistant Treasurer John 
J. Cisco to sell $10,000,000 of gold to the highest bidders. 
The usual notice appeared in the morning newspapers, and 
a panic at once followed. At 12 o'clock, or two hours after 
the opening of the Exchange, it was announced from the 
rostrum that Anthony W. Morse had failed. This terminated 





^yfeo^ 



A VICTIM OF DISI/)YAI/rY. 679 

lite career of Mr. Morse as a large operator and manipula- 
tor, and with his downfall the death knell was sounded to 
his imported theories. He struggled manfully for several 
years to regain his footing, but his prestige was gone, and 
he failed in every effort to push his way again to the front 
His ill-success soured him. His health failed, and he went 
to Havana to recuperate. There he died with profanity on 
his lips, enraged at the failure of all his hopes. He paid 
the penalty of disloyalty. His friends of the English 
nobility were largely to blame for all his misfortunes. 
Their predictions of the success of the South led him on to 
irretrievable ruin. He did not see that their wish was 
father to the thought. 

Former Giants op the Street. 
Henry Keep, once President of the Lake Shore road, and 
also of the New York Central, was in his day a power in 
Wall Street. He was the first to discover the intrinsic value 
of railroad property in the Northwest, and manipulated 
Chicago & Northwestern stock, both common and preferred, 
very successfully, making a great deal of money for himself 
and friends. He died very wealthy. He came to New 
York city from Watertown, in the interior of New York, 
and at first was an exchange broker, dealing mainly in un- 
current money. He had previously served in some humble 
position on a railroad. By careful and economical habits 
he was able to leave a fortune of several million dollars, 
largely in common and preferred Northwestern stock. The 
plot of ground on whichWilliam H.Vanderbilt built his pala- 
tial Fifth Avenue home was once the property of Mr. Keep, 
who originally bought it for about $250,000 for the purpose 
of building a charitable institution, but changed his mind 
when the property quadrupled in value. Then he concluded 
that charity should begin at home. He sold the plot, ex- 
tending for one block along Fifth Avenue, to Mr. Vander- 
biit for one million dollars- Still his original intentions 



680 MEN OF MARK. 

were good, and it was only after the real estate market, as 
with Satanic malice, had in that locality advanced 400 per 
cent, and taken him up into a high mountain of temptation, 
that his philanthropical project turned awry and lost the 
name of action. While Mr. Keep made a signally good Pres- 
ident of the Lake Shore road and was a great manipulator of 
stocks, he was a failure as President of the New York Cen- 
tral, and he resigned that post having no confidence in the 
future of the property. Commodore Vanderbilt, who believed 
in the property became his successor, and in a previous 
chapter I have given the story of the rise of that remarka- 
ble man. It is of interest to recall, by the way, that while 
President of the Lake Shore road Mr. Keep went largely 
short of the stock. As the President he naturally had in- 
side information. Addison Jerome, a brother of Leonard 
Jerome, was a big operator of the day, and undertook to 
corner President Keep. In those days a great deal of stock 
was sold on seller's option for thirty and sixty days. Mr* 
Keep had sold largely in this way, and Addison Jerome and 
his clique had bought heavily, expecting that the corner 
would be complete when the options should mature. A sur- 
prise awaited them. Mr. Keep made deliveries promptly in 
brand new shares. They were really an over-issue by the 
Company. It was a Waterloo in a double sense for Jerome 
and his fellow bulls. They were in over their heads. It 
had such a dampening effect that they immediately threw 
up the sponge and the stock came down with a crash. The 
issue of this new stock was smoothed over by turning the 
avails into the treasury of the Company, a fact, however, 
which did not prevent Mr. Keep from making a pretty good 
turn on his shorts. 

J. PlEBPONT MOEGAN. 

J. Pierpont Morgan, known as the "Kailroad Beorgan 
izer," and who has won a place in the front rank among 
American financiers, is a son of the well-known Junius S. 




jrfC'a? ^te^~-~£> 



a. PRACTICAL STUDENT OF FINANCE. 681 

Morgan, the head of the firm of J. S. Morgan & Go., of Lon- 
don, and the successor of George Peabody, the great philan- 
thropiot in the banking business there. George Peabody, 
some years before his death, visited this country, and, desir- 
ing a partner in his great banking house, made inquiry in 
Boston for a suitable person. Junius S. Morgan was re- 
commended as a young man of exceptional business talents 
and he was selected for the responsible post, the firm being 
known as George Peabody & Co. On the death of the 
celebrated head of the firm, the name was changed to J. S. 
Morgan & Co. The success of the father has been repeated 
in the signally successful career of the son. During the 
palmy days of the firm of Duncan, Sherman & Co., once re- 
nowned among the financial strongholds of the country, J. 
Pierpont Morgan was one of the clerks. It was there he 
graduated as a practical student of financial achievements ; 
it was there he won his spurs for the monetary campaigns that 
awaited him. Leaving the house that was then a synonyme 
for invincible solidity, Mr. Morgan established the firm of 
Dabney, Morgan & Co. Mr. Dabney was formerly one of 
the firm of Duncan, Sherman & Co. After a few years the 
firm in which Mr. Morgan ha dthus first engaged in business 
on his own account was dissolved. But the check, if it may 
so be termed, was only momentary, and colossal feats of 
financiering were to deck his career with triumphs. He 
formed a connection with the wealthy Drexels, of Philadel- 
phia, and a New York branch of their banking house was 
established, under the name of Drexel, Morgan & Co., 
which has for some years been largely engaged in the re- 
organization of crippled railroads like the West Shore ? 
Beading and many others. And they have been very suc- 
cessful. They have been financial physicians, healing sick 
corporate bodies ; monetary surgeons, amputating needless 
expenditures and reckless methods ; or, in perhaps more 
happy figure, skilful pruners of the vine, that the ultimate 
vintage might be more abundant. 



682 MEN OF MARK. 

Mr. Morgan is endowed with very positive traits of char- 
acter. Ho has the driving powers of a locomotive. He 
cares nothing for show ; he is a plain man of action. He 
strikes hard blows ; he is naturally aggressive. In speech 
he is candid to the verge of bluntness ; in action he is shorty 
sharp and decisive. Like a true soldier, he is a man of acts 
rather than words. Bugged as a Spartan in his nature, 
hating circumlucation, bombast and palaver, going straight 
to the mark* yet with due caution and prudence, he exhibits 
many of the best traits of the practical financier. 

I have asked Mr. Morgan for his picture for publication 
in this bookj, but with natural personal modesty, he has re" 
commended that his handsome partner, Anthony Drexel, of 
Philadelphia, be selected in his place, and with a view to 
encouragement in Wall Street of blushing modesty — that 
century flower of the financial conservatory — I have com-, 
plied with his request. 

Thomas L. James, 

President of the Lincoln National Bank, has had a career in 
New York brilliant in the service of the public, and marked 
in the practical skill with which confidences and enterprises 
have been directed by him. His training has contributed 
largely to his success as a financier. He came from Utica 
in 1861 and entered the Custom House as Deputy, and 
finally attained the position of Postmaster-General after a 
long and successful term as Postmaster of the City of New 
York. Mr. James directed the affairs of the Lincoln Bank 
so successfully that what promised to be a small up- town 
bank has developed into a National bank of considerable 
importance. He is one of the men of the times, one who 
feels the tide of local affairs, a man of the people who acts 
from wholly conscientious motives, and whose ambition has 
never exceeded his sense of duty. 



CHAPTER LX. 

JAMES B. AND JOHN H. CLEWS. 

The subjects of this sketch, whose portraits adorn these 
pages, are both members of my firm and I think this book 
would be incomplete without putting in a few words in 
reference to them. As will be seen by the sketches which 
follow, they both commenced their business careers in a 
modest way and through perseverance and industry have 
attained positions in the financial world which are in every 
way creditable to them. I have made it a rule never to 
introduce a blood relative into my office for a position of 
trust unless I believed him worthy of confidence and cap- 
able of performing the duties assigned to him in an intelli- 
gent manner. To do so would be an act of injustice, not 
only to him but to his associates in the office, and gener- 
ally causes ill feeling and bad results in the end. Happily 
with my nephews I have had no such cause or ground for 
complaint. On the score of merit alone they have suc- 
ceeded in advancing themselves to their present positions. 

James Blanchard Clews was born in Dunkirk, N. Y., 
August 4, 1859. After graduating from Chamberlain Col- 
lege, in this State, he entered the general office of the Red 
Line Transit Company, in Buffalo, N. Y., where he spent 
two years. He then accepted a position of responsibility 
in the General Managers office of the Union Steamboat 
Company, also located in Buffalo. Here his ability and 
his growing capacity for making a good business man were 
further satisfactorily illustrated and recognized by those 
officially over him. Realizing, however, that Wall Street 
offered better opportunities for advancement, he resigned 
his position and obtained one in my banking office as book- 



684 JAMES B. AND JOHN H. CLEWS. 

keeper. Commencing at the bottom of the clerical staff, 
he displayed so much ability, coupled with untiring energy 
in tbe performance of his duties, it was a pleasure to pro- 
mote him from time to time, whenever an opportunity offered, 
with the result that after eight years of vigorous train- 
ing through the successive grades of Book-keeper, Cashier, 
and General Manager, he was rewarded in 1890 by being 
made a member of my firm. It will thus be seen that my 
nephew possesses a thorough and practical knowledge of 
the inside workings of a banking house which is so essen- 
tial to a successful Wall Street business man. Being be- 
sides a student of nature, he has also improved every 
opportunity to learn the value of railroad and other invest- 
ments and to-day is a recognized authority on all such 
matters. He has served as President of an important rail- 
road and is a Director in a number of large corporations. 
John H. Clews,* junior member of the firm of Henry 
Clews & Co., was born October 28, 1856. In beginning 
his business career he entered the service of the Erie 
Kailroad Company, in the transportation department, where 
he gained a general knowledge of railroad management 
and its affairs. After a few years with that company he 
was offered a position with the Western Transportation 
Company, the water line of the New York Central Bail- 
road. Here he had the opportunity of completing his 
education in all the branches of transportation. He was 
then appointed Agent of the New York, Chicago & St. 
Louis Bailway at East Buffalo, N. Y., the distributing 
point for all freight between the East and the West. From 
this place he entered Wall Street, where he evinced the 
same progressive spirit. In 1890 he became a member of 
the New York Stock Exchange, acting as one of the chief 
brokers for Henry Clews & Co., and January 1, 1898, he 
obtained an interest in the firm. 

♦Deceased April 10, 1907. 







to* 



%dl%&^t^< 



A REMARKABLE CHAPTER OF HISTORY. 685 



CHAPTER LXI. 

A REMARKABLE CHAPTER OF HISTORY. 

Any review of the advance of this country during the 
past fifteen years, forms a record of the most wonderful 
progress ever made by any nation in such a short period. 
A record of the development of the country's resources 
through a resistless energy that seems destined to con- 
trol the markets of the world, reads almost like one of 
Grimm's famous tales, for after numerous trials, and 
the surmounting of many obstacles, the fairy wand is 
turning what we will into gold. 

One of the effects of the Vanderbilt boom of 1885 is 
to be found in the enormous mileage of new railroad 
construction in 1887, namely 12,000 miles. It may have 
looked at the time excessive, but it has turned out to 
be a fortunate anticipation of the great business strides 
made since that time. As far back as that year, our 
exports of manufactured articles began to show an ap- 
preciable increase. 

The year following will always be memorable as the 
time of the great blizzard which tied New York up so 
effectually for several days. As a direct result of the 
exposure to its severity, the country lost in Roscoe 
Conkling one of the most picturesque figures in Ameri- 
can politics and a man of unblemished reputation. He 
was taken from the arena of affairs too soon to allow hi« 
participation in the presidential campaign of that year. 



686 A REMARKABLE CHAPTER OF HISTORY. 

My own experience at the time has impressed the 
memory of the great storm strongly upon my mind. 
I had gone to Newport accompanied by Mrs. Clews to 
inspect some improvements then being made at my 
summer home, and in returning we came across the 
bay in the regular boat for the purpose of taking the 
noon-day train which ran from Boston to New York. 
When we were about half way over the bay, a vicious 
squall struck us and we began to doubt if we should 
ever reach the shore again. Finally, however, we did 
manage to land, and connected with the belated train. 
Progress of course was slow, so slow in fact that the 
next morning saw us only as far as New London, whence 
further movement was out of the question. Many of 
my readers will recall the railroad ferry over the bay 
from New London. The last train previous to ours 
had been started across, but the violence of the tempest 
had compelled the pilot to give up the task and return. 
With more incoming trains, New London was soon con- 
gested by the sudden increase in population, and accom- 
modations of any sort were at a premium. We were for 
a time at a loss as to where we could go, but fortunately 
succeeded in inducing the manager of the hotel there, 
to install us in the private apartments of the proprietor, 
who had the day before started with his family for 
Florida. He spent the ensuing four days upon the 
railroad, between New London and New Haven, 
banked in by a snow drift six feet high, while 
we enjoyed the hospitality of his apartments during 
that time. I am sure that we could r-ot conscientiously 
complain of the exchange. Telegraphic communication 
with New York was completely shut off. As our chil- 
dren had remained in the city, we were naturally 
anxious to know of their welfare and relieve any anxiety 



A REMARKABLE CHAPTER OF HISTORY. 687 

they might have as to our safety. There remained but 
one means of communication, and that a wire to Boston, 
whence messages could be cabled to Liverpool, and back 
to New York, and that is the way we got word to and 
from the metropolis. That was a rather circuitous way, 
but it was effective. 

Mr. Cleveland's renomination and accompanying free 
trade talk, disturbed the markets more or less from the 
date of his nomination in 1888 up to the time of General 
Harrison's election. The latter's entrance into the 
White House started the entire business of the country 
going, and through his wise management, we were 
brought to a very high point of prosperity, the last year 
of his term being, up to that time, one of the most pros- 
perous in our history. One of General Harrison's most 
signal achievements was in the exchange of reciprocity 
treaties, which was managed in such a masterly manner 
by his resourceful Secretary of State, Mr. Blaine. 

In the middle of General Harrison's term, occurred 
the greatest financial shock the world had experienced 
in the last quarter century, or since the panic of 1873. 

The suspension of the great firm of Baring Bros, of 
London in the fall of 1890 proved a demoralizing force 
from the effects of which finances did not thoroughly 
recover for several years. The direct cause of the fail- 
ure, as is now well known, was over-commitment in 
Argentine enterprises. Through the representations of 
an agent of theirs who had visited the country, every- 
thing bearing the name of Argentine was colored a most 
rosy hue, and the investments of that great house and 
its following were enormous. The inevitable reaction 
from such inflation found them with an Immense load 
of these securities unmarketable, and they were forced 
to suspend. The assistance rendered in rehabiliating 



688 A REMARKABLE CHAPTER OF HISTORY. 

the firm has been signally successful. Through the ef- 
forts of Mr. Lidderdale, Governor of the Bank of Eng- 
land, that institution took over some seven million 
pounds sterling of the congested obligations of the firm. 
By the wise, patient, and sagacious management of these 
former unmarketable properties the bank was finally 
enabled to realize enough therefrom to pay up all the 
arrears of the firm. 

The liquidation of American securities by British 
holders which was consequent upon their failure was 
enormous in volume and extended over several years. 

The year 1890 was further noteworthy as marking the 
birth of that unfortunate compromise of the silver agi- 
tation known as the Sherman silver-purchase law, which 
was to bring about such direful results within a brief 
three years. After the shock of the Baring panic had 
subsided, the beneficial effects of the McKinley tariff 
law began to be felt and with increased exports, largely 
of grain, in the succeeding year, together with ample 
protection for home industries, we were ushered into 
1892 under very auspicious circumstances. 

Bountiful crops again provided a basis for what de- 
veloped into a wonderfully prosperous year. During 
the year, Jay Gould (largely through the aid of his son 
George), by one of his characteristic strokes, succeeded 
in obtaining control of the Union Pacific system, while 
Mr. Huntington was thinking the matter over; but his 
personal control was not to last very long, for in De- 
cember of that year, Mr. Gould died, after a career of 
great activity and venturesomeness, which has elsewhere 
been reviewed in this book. 

The Democratic party still clung to their idol, and 
Mr. Cleveland was renominated for the presidency in 
1892, and by one of those inexplicable turns of public 



A REMARKABLE CHAPTER OF HISTORY. 689 

opinion which foolishly wished a change of administra- 
tion in the midst of prosperous times, he was elected, and 
returned to Washington the following March, be it said, 
enjoying the confidence of the great majority of the 
people. Almost from the time of that election, the Wall 
Street markets were depressed, the fear of free trade 
measures being the basis of distrust. Late in the year, 
the Treasury's stock of gold began to show signs of di- 
minishing, and with the exception of a few rallies, one 
notably in the following January, prices continued on 
the downward course. Co-incident with the decrease of 
gold reserves arose reports of a disposition on 
the part of the Secretary of the Treasury to inter- 
pret the word "coin" in our Government obliga- 
tions as allowing the redemption of the bonds in 
either gold or silver at the option of the Govern- 
ment. The effect of any doubt or question upon 
this most important subject could only result in un- 
settling confidence; of which Addison speaks as the 
"high priest in the temple of trade." For the first time 
in very many years, our Treasury operations showed a 
deficit, and things were going from bad to worse. The 
first great smash in prices occurred in May, when the 
famous Cordage Trust went to pieces. At the same 
time, Sugar stock and the remainder of the then few 
industrial shares took part in the sharp decline. The 
gold reserve had by the middle of the year reached 
alarmingly low figures, so that the pressure of public 
opinion compelled the calling of an extra session of 
Congress for the purpose of repealing the silver pur- 
chase clause of the Sherman law, — which had proved to 
be a veritable "Old Man of the Sea" upon the back of 
the country, threatening to throttle business interests 
everywhere. 



690 A REMARKABLE CHAPTER OF HISTORY. 

The Congressional procrastination, and obstructive 
tactics in the Senate worked havoc with trade and 
finance, and when relief finally came in the repeal of 
the silver purchase clause, the vitality of the patient 
had sunk so low, that it was a matter of years before 
returning health, in the form of confidence, brought back 
our native buoyancy and push. It became necessary 
early in the following year to issue f 50,000,000 worth of 
bonds in order to keep the gold reserve from getting too 
near the vanishing point. Tariff agitation, which had 
been started by President Cleveland's message to Con- 
gress in December, 1893, upset all the calculations of 
business men, who hoped, after a disastrous summer, 
that the tide had turned. But, no sooner was the fear 
of a silver deluge quieted, than revenue reform brought 
on another period of anxiety and delay. Fortunately 
when that distorted measure (with its 640 Senate 
amendments) which bore the name of the late William 
L. Wilson, a man of deep thought and the highest in- 
tegrity, did become a law in the following year, it was 
not burdened with an income tax. 

There are those who argue, probably to their own 
satisfaction, that this latter is an equitable form of 
taxation, but it has always appeared to me as putting 
a premium on idleness by taxing thrift. 

Another issue of $50,000,000 bonds was necessary 
before the year was out, and in spite of this replenish- 
ment, gold exports to pay our debts to Europe for secu- 
rities sent back to us by the ream, continued in such 
volume as to render a further issue imperative in the 
following February. This will be remembered as some- 
what unique in our Treasury operations, being in the 
form of a purchase of 3,500,000 oz. of gold, which cost 
the Government $62,500,000. The famous syndicate 




ROSWELL P. FLOWER. 



A REMARKABLE CHAPTER OF HISTORY. 691 

which undertook the delivery of the precious metal, 
agreed to do all in its power by the further deposit of 
gold in the Treasury and as far as possible, a control 
of foreign exchange rates to keep the reserve intact. 
Its powerful aid unquestionably saved the people from 
many more business disasters, by a bolstering up of con- 
fidence in the power of the Government to pay its debts. 
The syndicate lived up to its agreement fully, depositing 
in the month of August some seven and a half millions 
of gold. 

One scarcely hears mentioned nowadays the name of 
that poor fellow whose fabulous fortune (on paper) 
finally proved too burdensome for his uneducated mind. 
Barney Barnato was in his way a picturesque charac- 
ter, and a most vivid illustration of the overthrow of 
mind by matter, when the former is not in control. 

The sharp break in South African shares in the Lon- 
don market during October, of course exerted a sym- 
pathetic influence here; but worse things were yet in 
store for us. Our President's famous Venezuela mes- 
sage to Congress in December, 1895, acted like an earth- 
quake — which shook the markets to their very founda- 
tions and engulfed hundreds of millions of values before 
it subsided. The final outcome of the dispute between 
England and Venezuela has to a very great extent vin- 
dicated the former's claims. Let us, however, look upon 
the whole matter as a step forward for civilization in the 
advancement of the principle of arbitration, the true 
solution of all international difficulties. In 1896, we did 
finally reach the end of our troubles, though not with- 
out much worriment. A further bond issue of $100,- 
000,000 to meet deficits, brought that total up to $262,- 
500,000 issued in two years. A rather expensive ad- 



692 A REMARKABLE CHAPTER OF HISTORY. 

ministration, but "troubles come not singly, but in bat- 
talions." 

The Presidential Campaign just past, with the same 
nominees at the head of the respective parties, recalls 
the wild free silver talk of four years ago. Panic and 
depression succeeding each other had left the people 
almost hysterical. After Bryan's nomination in July, 
gold hoarding was the order of the day. Of course the 
effect of this on the money and security markets meant, 
under the circumstances, another downward plunge in 
prices. New York Central sold at 88, the lowest price 
in the past fifteen years, and C, B. & Q. at 53, the low- 
est price in nearly forty years, and all other stocks sold 
down in the same proportion. 

I have said that we reached the end of our troubles in 
1896, but the end did not come till the November election, 
which showed that William McKinley, "the advance 
agent of prosperity," had been elected President. The 
nomination of William J. Bryan, hitherto a compara- 
tively unknown man, but who electrified the Democratic 
National Convention by his specious eloquence, the elo- 
quence of a political Belial, able, in the Miltonic phrase, 
"to make the worst appear the better reason," whose 
famous phrase, "you shall not press down upon the 
brow of labor this crown of thorns, you shall not crucify 
labor upon a cross of gold," swept the convention off its 
feet and made him the nominee for president, was a blow 
that for a time seriously disturbed Wall Street and com- 
mercial circles everywhere. Mr. Bryan called for the 
free coinage of silver at the ratio of 16 to 1, and by 
his tireless activity in stumping the country created a 
feeling of depression that reached the pitch of panic and 
left the people almost hysterical with fear. But as 
Martin Van Buren said on one ocasion, "the sober 




J. PIERPONT MORGAN. 



A REMARKABLE CHAPTER OF HISTORY. 693 

second thought of the people is never wrong and is 
always efficient." The sober second thought of the peo- 
ple carried the day. Crowds might flock to hear the ora- 
tor, but they voted with the party of prosperity and 
honor. The carefully written speech of Mr. Bryan, a 
speech which, for once, he read from his manuscript in 
the great Madison Square Garden meeting, did not de- 
ceive the people; it fell flat. 

With Bryan's fiasco in this city, the clouds finally be- 
gan to break. How plainly the record of these four years 
shows the absolute domination of the markets by Wash- 
ington. And not of the financial markets alone by any 
means, but of the whole business interests of the coun- 
try, which finally were well-nigh paralyzed by four years 
of increasing anxiety and wonder as to what might hap- 
pen next. 

It is gratifying to turn away from that period of 
distress to the succeeding years of prosperity. The vin- 
dication of the good sense of the people in the election 
of William McKinley did, at last, turn the tide ; and for 
good and all, let us hope. With an unquestioned cur- 
rency basis, improvement became possible. We were 
greatly favored too, in the first year of Mr. McKinley's 
administration, by bountiful crops at a time of shortage 
in Russia, Prance, and the Danubian Provinces. It was 
a great year of prosperity for our farmers, who, through 
good prices, and the exportation of some 120,000,000 
bushels of wheat, were enabled to pay off mortgages in 
wholesale fashion, and herein we see the beginning of 
present good times. Furthermore our export trade 
showed great increase. As was to be expected, there 
was a great rush of importations just prior to the pas- 
sage of the Dingley Tariff Bill in July, and a consequent 
decline in revenues immediately thereafter; but the 



\ 



694 A REMARKABLE CHAPTER OF HISTORY. 

completed record of its operation up to the present 
time is a splendid tribute to the wisdom of its author. 
The Supreme Court decision in 1897 in what was known 
as the Trans-Missouri Case, declaring all railroad pool- 
ing illegal, proved somewhat of a shock to the market, 
but with improvement in business, our roads soon found 
enough traffic before them to more than go 'round, with- 
out worrying about its division. 

The year 1898 began very favorably with large gold 
imports and easy money. Cuban affairs, which had 
begun to threaten late in the previous year, finally cul- 
minated in the outbreak of war with Spain in April. 

The condition of things in Cuba having become a re- 
proach to the civilized world, this Government, acting 
for the conscience of Christendom, directed that the war 
which Spain was waging against the Cuban revolution- 
ists should cease, with all its indescribable horrors, its 
barbarous cruelties to women and children, and as 
Spain did not heed the warning, our Government inter 
vened in the interest of common humanity, an event 
which marked a distinct advance in the history of the 
human race, for history makes no mention of any war 
waged on such a scale in behalf of the cause of human- 
ity. Certainly never was a war more clearly justified 
or one which showed greater courage on the part of the 
intervening nation, for there can be no doubt that more 
than one of the Continental powers of Europe would 
have been glad to side with Spain and would have done 
so, but for the emphatic negative of Great Britain. 

Naturally there ensued a period of depression, but 
it was short-lived. The ensuing months of activity and 
buoyancy surpassed anything of the kind in our history. 
After the apprehension as to how the business world 
would adjust itself to war conditions had passed away. 



A REMARKABLE CHAPTER OF HISTORY. 695 

business began to boom all over the country. We were 
on our feet again with financial health restored. That 
wonderful boom in the stock market, begun in the sum- 
mer of 1898 and lasting until the spring of 1899, will 
not soon be forgotten. 

It seems more like a dream than a fact that trade and 
commerce and financial operations could swell to such 
well-nigh inconceivable figures, revealing a degree of 
prosperity almost past belief, like some marvelous good 
fortune of an individual in a Persian tale, favored by good 
Genii, actual fact rivalling fancy or throwing it far into 
the shade. In other words the oldest and most ex- 
perienced merchants and financiers in this country were 
astounded at the degree of solid prosperity attained by 
the great Eepublic, the lion's whelp, rivalling or sur- 
passing the strength of the old lion, the mother country 
across the sea. 

To the late Ex-Governor Flower belongs the credit of 
fearlessly taking the initiative in that marvelous rise in 
values to which I shall revert later on. 

The formal close of the Spanish war gave fresh im- 
petus to trading and prices kept soaring well on into the 
spring of 1899. The year 1898 has the distinction of 
marking the beginning of the greatest era of trade com- 
binations, those gigantic commercial engines, that the 
world has ever seen. The capitalization of those inau- 
gurated during 1898 and 1899 reached the fabulous ag- 
gregate of $3,500,000,000. The mind is staggered by the 
possibilities of enterprise which such a sum suggests. 

The tendency towards centralization in the railroad 
world was first shown in the merger of the Lake Shore 
road with the New York Central. 

The year 1899 was one of great prosperity, the great- 
est since we have been a nation, albeit its close was 



696 A REMARKABLE CHAPTER OF HISTORY. 

marked by one of the worst semi-panics the Street has 
ever experienced. In order to account for some of the 
most important features of the panic of December, 1899, 
it is necessary to take a glance backward at certain 
great financial events of the year even as early as April. 

In that month was formed the famous Amalgamated 
Copper Corporation, a creation of the Standard Oil 
magnates. 

The capital stock of the company was $75,000,000. 
The shares were said to be subscribed five times over. 
Owing to its parentage, the stock became popular, and 
was sustained at par for some time, but scarcely two 
months had elapsed before a break of 25 per cent, in 
the price occurred. 

This break was regarded as a rather suspicious cir- 
cumstance, and was supposed by the "knowing ones" to 
be a part of the deal. The Amalgamated Company was 
a mammoth combination, comprised of large share in- 
terests in over 30 companies, the famous Anaconda of 
Montana heading the list, and being the most prominent. 

The panic fell most severely upon the copper com- 
panies, the shrinkage on the share capital of which for 
the year is alone estimated at nearly $200,000,000. 

Besides this, the currency movement to the South and 
West had been unusually large and prolonged, and 
finally tightness of money brought about an immense 
drop in the entire stock market. But with general condi- 
tions prosperous all over the country, such panics hap- 
pily do not leave lasting scars. 

The last year of the wonderful nineteenth century 
has been a remarkable one in our history. Since the first 
defeat of the silver agitators in 1896, our financial 
strides have been so rapid that it seems now a question 
of but a short time when New York will be the financial 



A REMARKABLE CHAPTER OF HISTORY. 697 

centre of the world. What a contrast between our posi- 
tion in 1900, and that in 1895, when we were knocking at 
the door of Europe with bonds for sale to provide run- 
ning expenses for our Government. To-day England 
finds it to her interest to place $25,000,000 of her war 
loan with us, Germany asks for $20,000,000 of American 
gold, Russia is seeking to borrow from us and Sweden 
has not gone empty-handed away. And these accom- 
modations have been accorded without causing so much 
as a ripple in our money markets. The source of such 
plenty is of course found in our wonderful increase of 
exports. For ten months of this present calendar year, 
the trade balance in our favor approximates $500,000,- 
000, making, in the past three years, the vast total of 
fifteen hundred million dollars balance to our credit. 
There we see both the lever and the fulcrum with which 
to move the financial world. 

A little over a year ago occurred the death of Cor- 
nelius Vanderbilt, the grandson and namesake of the 
Commodore. Here was a gentleman whose char- 
ities were almost boundless. His gifts to the people 
through art and in many other ways were princely, but 
perhaps his memory is greener in the minds of those 
who, through his great private charity, were lifted above 
want. 

These great latter day fortunes have not often failed, 
in this country, in being administered by men whose 
conception o/ life, and of duty toward their fellow men 
has turned the duty into a pleasure. This is a very 
great tribute to American citizenship and should not 
be forgotten or lost sight of by our sometime critics. 

The passage of the Currency bill in March, 1900, un- 
doubtedly did much to increase Europe's faith in our 
monetary stability and, furthermore, the result of the 



698 A REMARKABLE CHAPTER OF HISTORY. 

Presidential election of 1900, the triumph of the party 
of sound money seems to preclude the recurrence of any 
attacks upon the financial honor of this country. There 
has been a campaign of education going on in this coun- 
try ever since the advocate of the free and unlimited 
coinage of silver at the ratio of 16 to 1 first promulgated 
his doctrines. The benefit to the people of this knowl- 
edge of public affairs is clearly apparent. They will 
have none of false theories and suicidal experiments, 
they will not go after false financial gods, they will not 
bow the knee to the Baal of repudiation and confisca- 
tion. 

While the modern method of commercial development 
is open to criticism in some respects, still I take it that 
the evils complained of are not those of very existence 
but are rather those of circumstance, and are open to 
correction by the will of the people. How often have 
we heard that these combinations stifle competition — 
but for how long? Does not their existence excite com- 
petition? Furthermore, their management calls for 
the very highest ability and creates a keen intellectual 
competition which cannot fail to be of educational 
value at large. It remains for ensuing years to provide 
correction for those defects which are bound to appear 
in any new and untried system. 

We end the century that almost covers our national 
existence with a past record and prospects unparalleled. 
We enter the new century full of faith in our institu- 
tions, that have stood severe tests even in our short life, 
and full of hope for even greater national achievements. 
We are fast taking the lead in the affairs of nations as 
well as in the affairs of commerce and finance, and have 
need of great steadiness of character, and fixity of na- 
tional honor, which now seems assured for all time. It 



A REMARKABLE CHAPTER OF HISTORY. 699 

augurs well that we begin the twentieth century, which 
displays such vistas of greatness, at peace with all the 
world. 



700 BOOMS IN WALL STREET. 



CHAPTER LXII. 

BOOMS IN WALL STREET. 

Wall Street has lately been enjoying quite a boom 
in some respects differing from any in its previous his- 
tory. Probably the most interesting feature about this 
boom is that it is not in any sense spectacular. In that 
respect it is unique. Prices of many stocks are higher 
and intrinsic values greater than they have ever been 
before. The market has all the qualities that normally 
would cause intensest excitement and focus the atten- 
tion of the entire country on the Stock Exchange. Yet 
in spite of these conditions, the Street is in a normal 
state of mind, and it is doubtful if the general mass of 
the people, who get their information from the news- 
papers are fully aware that there is even an ordinary 
boom in Wall Street. This unusual condition is due, I 
believe, to the fact that the boom we are enjoying is 
built on a foundation that reaches clear to the bowels of 
the earth. There is nothing unnatural or artificial 
about it. Wall Street is simply one of the centres that 
reflects the general prosperity throughout the country. 
Farmers, merchants, mechanics, mill workers, and 
miners are all so intent in keeping pace with the prog- 
ress in their own pursuits that they have no time to cast 
eyes our way. The same conditions that are booming 
stocks, are booming everything else in the country at an 




Photograph from Underwood & Underwood, N. Y. 



JOHN D. ROCKEFELLER. 



BOOMS IN WALL STREET. 701 

equal rate, so that we are in nowise singular or deserv- 
ing of special attention. 

Another factor too, has developed in the Street that 
prevents the usual excitement and hurly burly incident 
to a rising market. This is the absence of a pronounced 
central figure, or controlling force. Usually a boom 
centres about some one man who stands boldly out in 
the open, or whose hand it is known is manipulating 
values. At present the manipulation is being carried 
on in a method that is as quiet as it is novel and un- 
usual. That the market is being manipulated, is ap- 
parent enough even to the most casual observer. But 
the source of this manipulation is probably known only 
to a few; all others are but students in the Street. 
They know that a new order has come, and that this 
order is due to the most powerful and resistless influ- 
ence that has ever manifested itself in Wall Street. 
This influence is very largely composed of the Standard 
Oil Combination, who have introduced in their Wall 
Street operations the same quiet, unostentatious, but 
resistless measures that they have always employed 
heretofore in the conduct of their corporate affairs. 
Beside this group, every other man or combination of 
men that has ever operated in the Street are materially 
belittled by comparison. The heretofore conspicuously 
big operators that have flashed up and across the hori- 
zon, appear comparatively small beside the men who 
are running things for us now. 

At his best, Jay Gould was always compelled to face 
the chance of failure. Commodore Vanderbilt, though 
he often had the Street in the palm of his hand, was 
often driven into a corner where he had to do battle for 
his life, and so it has been with every great speculator, 
or combination of speculators, until the men who con- 



708 BOOMS IN WALL STREET. 

trol the Standard Oil took hold. With them, ma- 
nipulation has ceased to be speculation. Their resources 
are so vast that they need only concentrate on any given 
property in order to do with it what they please. And 
that they have so concentrated on a considerable num- 
ber of properties outside of the stocks in which they are 
popularly credited with being exclusively interested is 
a fact well known to every one who has opportunities 
of getting beneath the surface. They are the greatest 
operators the world has ever seen, and the beauty of 
their method is the quiet and lack of ostentation with 
which they carry it on. There are no gallery plays, 
there are no scareheads in the newspapers, there is no 
wild scramble and excitement. With them the process 
is gradual, thorough and steady, with never a waver or 
break. How much money this group of men have made, 
it is impossible even to estimate. That it is a sum be- 
side which the gains of the most daring speculator of 
the past were a mere flea bite, is putting the case mildly, 
and there is an utter absence of chance that is terrible 
to contemplate. This combination controls Wall Street 
almost absolutely. Many of the strongest financial in- 
stitutions are at their service in supplying accommoda- 
tions when needed. With such power and facilities it 
is scarcely conceivable what these men must be making, 
what they can do on either side of the market. So far, 
fortunately, their manipulations have all been one way, 
upwards, and in conjunction with the general prosper- 
ity it has resulted in making large sums of money for 
nearly everybody in the Street. 

Here and there we have heard of losses, some of them 
fairly large, but in comparison with the general money 
making these are hardly to be taken into consideration. 

The last preceding boom that Wall Street enjoyed 



BOOMS IN WALL STREET. 703 

was as different from the present as it is possible to 
imagine. It had all the elements which this one has 
not. It centred about one man who stood out in the 
lime-light clear and distinct. It kept the Stock Ex- 
change in a constant state of ferment. It filled the 
newspapers with column upon column of sensational 
stories. It made millions for an army of retainers, on 
paper, and it kept the market jerking up and down for 
months. Roswell P. Flower, ex-governor of the State 
of New York, was the leader of the boom, and a more pic- 
turesque figure has never been seen in Wall Street, 
which is saying a great deal. Mr. Flower was an in- 
dividual of very plain exterior. He often used language 
that was noticeable more for its force and directness 
and emphasis, than it was for polish. He had an 
ambling gait and looked like a well-fed farmer. He 
was rarely seen without a huge quid of tobacco that al- 
most filled the left side of his mouth. Spittoons were 
an essential part of the furnishings of his office. His 
clothing hung on his person not unlike meal sacks. His 
hat was rarely brushed, and for days at a time, ap- 
parently, he forgot to shave. Altogether he was the last 
person, in appearance, who might be expected to lead 
in a district that is famous for its well groomed men. 
His education was certainly not collegiate ; doubtless all 
his peculiar traits the ordinary man would have judged 
a handicap, still they were Mr. Flower's strongest aids. 
The lack of artificial polish gave people confidence in 
his statements. His limited education enabled him to 
think clearly along certain lines without being ham- 
pered with mental digressions, which would probably 
have come with a higher original mental culture. 

As the administrator and manager of the estate of his 
brother-in-law, Henry Keep, he came into the Street 



704 BOOMS IN WALL STREET. 

twenty or twenty-five years ago. He in that way con- 
trolled a large amount of funds, which by conservative 
direction he increased very substantially. He scarcely 
ever figured in the speculative field to any great extent, 
until after he had completed his term as Governor of 
New York State. When he returned to the Street from 
Albany, he naturally came with a considerable prestige. 
Ex-governors of the Empire State are not very plentiful 
in and about the Stock Exchange. He also brought 
with him a large political following. In both of the 
great parties in New York State there are many men 
of standing and influence who like to take a flyer in 
Wall Street. Almost to a man they associated them- 
selves with Mr. Flower, who, during his term at the 
capital had made hosts of friends with Kepublicans and 
Democrats alike, and this, though his party loyalty had 
never been questioned. He also had close associations 
with most of the big capitalists. After he had settled 
down to business, on leaving politics behind, Mr. Flower 
picked out several stocks as his specialties, Chicago Gas, 
Federal Steel and Kock Island being some of these. 
Under his manipulation all these properties went up 
and soon began to show a big advance, unusual strength 
and great activity. The bears made frequent assaults 
on his position and now and then pushed him towards 
the wall, but he always fought his way to the front 
again, and came out master in every encounter. When 
he had himself pretty well entrenched in the specialties 
he was handling, he suddenly plunged into Brooklyn 
Rapid Transit, and for months he kept things stirred 
up in a way that even wall Street has not seen very 
often He picked up the stock commencing at six 
dollars a share, and in an incredibly short time ran it 
up to over 138. Almost every politician in the State 



BOOMS IN WALL STREET. 705 

made a fortune on paper. Mr. Flower was immensely 
popular with the Wall Street news reporters, who 
helped his boom along through the glowing accounts 
they wrote from day to day. 

Under the impetus of the swirl in Rapid Transit, 
practically every property in the Street went flying up- 
ward, until the end did not seem to be in sight. The 
bears were beaten to a standstill every time they showed 
their heads, the only result of their attacks being 
that Flower stocks would jump up a notch higher. The 
ex-governor preached Americanism and confidence, un- 
til everybody believed that if a stock was only grounded, 
and the property located in America, you could buy it 
at any price and still be on the safe side. 

That a terrible panic did not grow out of this boom 
was due only to one fact: Mr. Flower's sudden death. 
Had he lived thirty days longer, the bubble must have 
been pricked, and the result would have been disas- 
trous. Mr. Flower went to the country for a day's rest, 
ate freely of ham and radishes and washed his frugal 
meal down with a copious supply of ice water ; he natu- 
rally, in consequence, died in a few hours afterwards 
of an attack of acute indigestion ; his death alone saved 
the Street. 

The Rockefellers, the Vanderbilts and his other 
wealthy friends rushed into the market with millions 
and sustained values. They were in a position to at- 
tribute the threatened reaction to his death and pointed 
out the absurdity of letting such an incident affect the 
value of stocks. They discounted the break that must 
have come in the natural course of events under the forc- 
ing process that was going on. Reasoning such as this 
spread broadcast through the papers stopped the break. 
Where the bottom would have fallen out entirely there 



706 BOOMS IN WALL STREET. 

was only virtually a moderate break all along the line; 
why it was not worse was due to the market being 
bolstered up by the Standard Oil Combination and 
others with them coming to the rescue just in time to 
prevent a big smash. The small speculators operating 
on moderate margins were of course all wiped out 
almost to a man, but many of the big fellows were saved. 
It is probably the only instance on record where the 
death of a big operator saved a general smash. Those 
hurt were numerous politicians and small fry operators 
who instead of getting away with snug fortunes in the 
shape of profits, lost their all. 

An interesting circumstance of the Flower boom was 
developed involuntarily by young Joe Leiter. Leiter 
himself, although he had gone to the wall some time 
previously, indirectly had brought about certain con- 
ditions that served Mr. Flower's purpose admirably. 
These conditions were the general release of hundreds of 
millions of dollars on mortgages on farm lands. When 
Leiter began to corner wheat, it was ruling down in the 
neighborhood of sixty cents a bushel. He lifted it to con- 
siderably over a dollar before he went broke. This 
enabled thousands of farmers to realize on their crops 
at the dollar figure and above, which brought prosperity 
almost over night to the wheat growing belt. With the 
money realized from their wheat the farmers paid off 
their mortgages to the extent of two or three hundred 
million dollars. These mortgages were generally held 
in the East. This released that much Eastern capital, 
causing that vast volume of money to seek investment. 
The men controlling this money were overjoyed when 
Mr. Flower made an opening for them through the Wall 
Street boom, and hence it was a comparatively easy mat- 
ter for a time to push up values. 



BOOMS IN WALL STREET. 707 

J. Pierpont Morgan, now a noted character, was 
trained as a clerk in the one-time famous banking 
house of Duncan, Sherman & Co. Later he made a 
connection with Anthony J. Drexel, probably the 
wealthiest banker in his time in America. Out of this 
grew the house of Drexel, Morgan & Co., with Mr. Mor- 
gan as the managing partner in New York. When Mr. 
Drexel died, Mr. Morgan absorbed the entire business, 
and a few years later when his father died, Mr. Morgan 
became the head of the London house of J. S. Morgan 
& Co. as well. This put him in a very prominent posi- 
tion. He soon thereafter demonstrated his influence by 
reorganizing the bankrupt Kichmond & West Point Ter- 
minal Kailway & Warehouse Co., changing its name to 
the Southern Kailway Co. A number of small roads 
were added to it, many of which were in financial 
straits, and practically all of them had been badly man- 
aged. He combined them into one system under the 
one head. This railroad combination is now one of the 
great properties of this country. Mr. Morgan next 
turned his attention to the reorganization of the Reading 
and the Erie roads, which were in a bad way. He soon 
produced order out of chaos there, and that resulted in 
a boom in railroad stocks all along the line. He had 
several sharp tussles, however, with some of the big 
stock holders, who tried to stand out against him on ac- 
count, as they thought, of his plans being too drastic; 
and during these tussles he not infrequently resorted to 
the usual methods to break values, buying at the reduced 
prices so as to strengthen his control. 

The people who followed Mr. Morgan's lead in these 
transactions generally made money. 

A different sort of deal was engineered a few years 
before by S. V. White, popularly known as Deacon 



708 BOOMS IN WALL STREET. 

White, because of his position as deacon in Plymouth 
Church. Mr. White is one of the oldest operators in 
the Street, and one of the most striking figures. He has 
made half a dozen great fortunes in speculation and lost 
them, but he is as undaunted as ever, and in spite of the 
fact that he is now over seventy years old, he is still 
active daily in the market. 

Probably one of the most unique stock deals ever 
carried out in the Street resulted from the transaction of 
Joseph Bannigan when President of the Rubber Trust. 
The history of this deal which for a time resulted in a 
great boom in industrials, has never been told, and is 
known to but very few persons, most of whom, by the 
way, were its victims. 

Bannigan was an uneducated Irishman who could 
hardly read and write. He commenced life in a New 
England rubber factory and worked for $1.50 per day 
and died worth five million dollars. He was shrewd 
and bright and knew the value of money. He saved to 
such good purpose that when the Rubber Trust was 
formed he was at the head of one of the biggest fac- 
tories in the country, located in Providence. His 
knowledge of the trade was so thorough that despite the 
fact that he almost invariably used small i's in writing 
a letter, he was made President of the Trust, his hold- 
ings amounting to about forty thousand shares. When 
matters had been moving along for some time, Ban- 
nigan made up his mind that the other men in the trust, 
the big fellows, were not treating him right, and that 
the best thing he could do was to get out. So he packed 
his stock certificates in a grip sack, left Providence on 
the night boat, landed in New York bright and early, 
had his breakfast and then made a bee line for a stock 
brokers' office. He had assured himself in advance 



BOOMS IN WALL STREET. 709 

that this stock broker was to be relied on and told him 
frankly what he intended to do. 

"I want to sell out bag and baggage," he said. "I 
want to get rid of every one of my forty thousand 
shares. Here they are, put them on the market and 
sell them." The stock broker told him that that would 
never do. If he wanted to realize full value for his 
holdings he would have to go about it in a different 
way, for if he threw his forty thousand shares into the 
market it would knock the bottom out and he would 
get little or nothing for his stock. Mr. Bannigan saw 
the point, and asked what he was to do. 

"Buy," said the broker. 

"But I don't want to buy; I have got more now than 
I want." 

"That is all right; buy anyway, that will make a mar- 
•ket for the stock, and then you can unload when the 
time comes." 

"How much must I buy?" 

"Oh, about $250,000 worth." 

"But I have not got $250,000 in cash to go and buy 
Kubber stock." 

"Well, you can borrow it ; a man in your position, Mr. 
Bannigan, would have no difficulty in borrowing 
$250,000." 

Much against his will the old man was finally per- 
suaded to do as he was told. About two weeks later 
the broker wrote to him that he must buy some more, 
this time, $200,000 worth. Mr. Bannigan used rather 
strong language, but finally yielded as he had before. 
He borrowed $200,000, and turned it over. With this 
additional capital to work on, the brokers continued to 
manipulate the market. The insiders soon discov- 
ered that some strong party was buying; but they did 



710 BOOMS IN WALL STREET. 

not know who, Bannigan having carefully kept himself 
in the background. His brokers operated skilfully in 
the stock, one day buying, the next, selling to keep the 
stock active. The brokers after awhile commenced to 
borrow large amounts of the stock. This convinced the 
insiders that there was a big short interest somewhere, 
and they got together in order to squeeze the shorts. 
The inside holders who held most of the stock, who had 
combined to squeeze the shorts out, as they thought, 
put the price up to 61, and at about that figure Banni- 
gan's was all unloaded. Bannigan now found himself 
full of money and the other fellows had his stock. 
They never awakened to the fact that the President had 
sold out on them until his shares were delivered against 
their purchases, as they thought, of short stock. Kub- 
ber soon thereafter did not stop tumbling until it had 
gone from 61 to 16. This deal had all the elements of a 
comedy-drama and the playwright who can do it justice 
will find material there which will make him an ever- 
lasting fortune and reputation. I have touched but 
lightly on a few of the important incidents. It is not 
often, however, that newcomers in the Street fare as 
well as this in the end. For a time they will go on mer- 
rily enough, and send things booming; but in the end 
many get the worst of it. A. B. Stockwell is a good 
illustration of the truth of this. He is still around the 
Street somewhere, but is one of the "has beens," like 
numerous other former conspicuously large and sup- 
posed to be brilliant operators. At one time he was 
worth many millions of dollars. To-day, he is upside 
down. His start in life was as purser on a Lake Erie 
steamboat ; his father, it is said, kept a livery stable in 
Cleveland. On one of his trips, Stockwell was in a 
position to show considerable attention to Elias Howe, 



BOOMS IN WALL STREET. 711 

the inventor of the eye at the upper end of the sewing 
machine needle. Mr. Howe was accompanied by his 
daughter. Stockwell made himself agreeable to Miss 
Howe also, and with such good effect that he managed 
to win her affections and soon thereafter married the 
young lady. When Mr. Howe died, Mrs. Stockwell' 
came into possession of her father's millions. With 
this nest egg Stockwell started in Wall Street, and 
before anyone realized what had happened he was the 
most talked of man in the district. He put all his 
wife's millions into Pacific Mail stock, and secured entire 
control of the Company. He came into the Street as 
plain Stockwell, then as the news of his liberality and 
good fellowship spread, he became Mr. Stockwell ; after 
he got hold of Pacific Mail he was Commodore Stock- 
well, by common consent. Everybody bowed and 
scraped to him and no man was so high and mighty that 
he was not proud to shake his hand. Stockwell took 
hold of Pacific Mail at about 40 and sent it up to 107. 
It was at this period that he was worth over fifteen mil- 
lion dollars; but he found, unfortunately, when it w T as 
too late to retreat, that while Pacific Mail was up to 
107, it was not worth that figure when the unloading 
commenced. He was landed high and dry with it all 
and the Street told him he was welcome to it. He 
tried to sell, and found that there was no market. 
Then came violent demands on him to pay up his nu- 
merous call loans, and in order to respond thereto, he 
had to sell regardless of price and thus created a whirl- 
pool, which finally sent the stock down to the price at 
which he commenced his original purchase at 40. In 
this one upset, he lost all his paper profits and his wife's 
millions besides. This catastrophe not only stripped 
him of all his worldly possessions, but reduced him to the 



712 BOOMS IN WALL STREET. 

position of being plain Stockwell again, and there are 
many also who even go so far as to call him "that 
little red-headed cuss." That was the most famous 
boom in the history of Pacific Mail, notwithstanding 
Leonard Jerome's previous brilliant ups and downs in 
that former erratic property. 

Leonard and Addison Jerome had a good time with 
Pacific Mail for a while. They ran it up to high figures 
several times; but finally meeting with the same ex- 
perience that Stockwell did. The two Jeromes from 
being among the wealthiest and most dazzling operators 
in the Street, were in the end practically wiped out. 
Leonard Jerome, who was the father of Lady Randolph 
Churchill, had nothing left to bequeath his daughter ex- 
cept an equity in the house now occupied by The Man- 
hattan Club on Madison Avenue, which yields an in- 
come of about $15,000 a year, of which Lady Churchill 
gets $10,000. 

These are a few of the booms that have stirred up 
things in Wall Street at one time or another, as did the 
Keene booms, of which there were several, the Gould 
booms, and the Vanderbilt booms, all of which have 
been referred to in previous chapters in this book. 

The question of trusts or trade combinations has, in 
recent years, excited a good deal of interest. One of 
the most interesting figures in this connection is John 
D. Rockefeller, who will undoubtedly be regarded by 
the future historian as a striking character in the busi- 
ness history of the nineteenth century. And be it re- 
membered that history now concerns itself, not so much 
with the doings of governments; not so much with the 
personalities of emperors, kings, presidents or even 
with political parties, as with the life of the people 
themselves. This is clearly shown by such historians 




WILLIAM ROCKEFELLER. 



BOOMS IN WALL STREET. 713 

as Lord Macaulay and John Bach McMaster. And 
looking at history in this way, surely John D. Rocke- 
feller must be regarded as one of the most interesting 
types of the great commercial powers of the day. He 
was a pioneer, a commercial Daniel Boone, striking out 
into a new and untrodden field of enterprise, taking 
great risks, undergoing grave financial perils of a novel 
kind and at length winning a complete and lasting suc- 
cess — a success which has filled business history 
with his achievements and the world with his fame. 
It was a great stride from the little farmhouse 
in Tioga County, New York, to the place which 
he fills to-day. Born in 1838 he is now in the 
prime of life. Beared by strict, church-going peo- 
ple, his word is as good as his bond; he is the 
soul of business integrity, and a striking example of 
what thrift, enterprise and persistency will do for a 
young man who starts out in life with apparently little 
or no chance of success. His old schoolmaster, it 
seems, was the first to get the young man to look into 
the refining of petroleum. Not so many years ago, they 
used sperm oil, and it cost $1.50 a gallon. How to 
refine the thick, ill-smelling oil found in the water 
courses of Pennsylvania was a problem. It was black 
slime, and John D. Kockefeller, by hitting upon a 
method of refining it and introducing it in the home 
throughout the world has made a fortune that recalls 
the fable of Midas. Before he was twenty-one. he 
formed a partnership with a man named Hewitt and 
at first engaged in the warehouse and produce business. 
Then came the great oil craze in Pennsylvania. Poor 
farmers suddenly became rich; thousands flocked to 
the oil fields. Young Rockefeller kept his head. 
Asked to make investments in oil wells for Cleveland 



714 BOOMS IN WALL STREET. 

friends he dissuaded them from the project on the 
ground that the thing was being overdone, and with 
Samuel Andrews, who was familiar with the general 
processes of distilling, engaged in the refining branch 
of the petroleum trade. The firm subsequently became 
[Rockefeller, Flagler & Andrews, which rapidly expanded 
its field of operations, and in 1870 organized the Stand- 
ard Oil Company with a capital of $1,000,000. It 
started pipe lines to ship the oil to the seaports. It 
made millions in by-products once considered worthless. 
It established markets all over the known world, cheap- 
ened its methods of production and outstripped all com- 
petitors. Little wonder then, that its "extra" dividend 
in the year 1899 amounted to $23,000,000 over and 
above the regular dividends on the whole capital stock. 
Mr. Kockefeller attributes his success to early training 
and perseverance. That is, like other men who have 
stamped their individuality upon the affairs of man- 
kind, he is what is termed a causationist ; in other 
words, he believes that nothing is got for nothing; that 
effects proceed from causes, and the cause of success he 
believes to be largely perseverance. He believes that 
perseverance overcomes almost everything, even nature 
itself, and in that opinion this practical business man 
is at one with the philosophers of antiquity. 

He and his associates in the Standard Oil Company 
are naturally a power in the stock market. They are, 
of course, very large holders of railroad stocks and 
bonds and at times their influence is as irresistible as 
the laws of gravitation. John D. Kockefeller's influ- 
ence alone could be so, as he is supposed to be the rich- 
est man in America and indeed the richest man ever 
known in human history. His is believed to be the 
greatest fortune ever accumulated by any man within 



BOOMS IN WALL STREET. 715 

his own lifetime. That he feels the responsibilities of 
his great wealth is obvious from his munificent gifts 
to educational and charitable institutions, to churches 
and to a hundred other praiseworthy objects. His 
princely donations to schools, colleges and universities 
rival those of that other public-spirited citizen, Andrew 
Carnegie. They are equally strong in their belief that 
the greatest charity lies in helping others to help them- 
selves. 



716 A GLIMPSE INTO THE FUTURE. 



CHAPTER LXIII. 

A GLIMPSE INTO THE FUTURE. 

I believe that it would be difficult to set bounds to 
the possibilities of American development. The invent- 
ive genius of the people, their adaptability to all cir- 
cumstances, their tenacity of purpose, their wonderful 
energy, and the fabulous resources of the country all 
make it certain that the United States will reach a 
degree of power and prosperity hitherto unexampled 
in human history. Carlyle's "French Revolution," has 
been strikingly described as "history read by flashes of 
lightning," and I am tempted to use the same language 
in describing the commercial revolution which has 
taken place in this country during the last few years. 
Great as it is, however, I think it merely a prelude to 
what is to come. We are destined for one thing to have 
a great Pacific trade. Fifty years ago, Humboldt said 
that the day would come when the trade of the Pacific 
Ocean would be as great as that of the Atlantic. And 
the increase within a year or two in this commerce 
augurs well for the ultimate fulfillment of the great 
scientist's prophecy. We readily adapt ourselves to the 
requirements of foreign markets and that is a very im- 
portant point. Lord Charles Beresford bears testimony 
to this fact. He says with truth that Americans find 
out what the foreign markets want, then they supply it. 
The English say in effect, "We know what you want 



A GLIMPSE INTO THE FUTURE. 717 

better than you know yourselves." The American sends 
the Chinese thirty-inch-wide calico, which is what they 
want; the Englishman sticks to twenty-seven inches, 
with the remark expressed or implied, "Take it or leave 
it." And the Chinese will leave it rather than take it 
and the American manufacturer will be the gainer 
thereby. Minister Wu's recent remarks on the ne- 
cessity of finding out just what the Chinese want and 
then conforming to their wants, cannot be too carefully 
borne in mind. Furthermore, we are ready to adopt the 
newest and most highly perfected machinery regardless 
of cost. Mr. Carnegie, for instance, on a single occa- 
sion discarded machinery which had cost him $2,000,- 
000, and replaced it with the latest which inventive 
genius could supply. The London engineering jour- 
nals, on the other hand, admit that the British manu- 
facturers will not change their machinery no matter 
how apparent it may be that they are being distanced 
by their more progressive rivals in this country. They 
reason that they have put just so much money into the 
"plant" and must get just so much out of it before they 
will replace it. This seems a good deal like the ostrich 
which thrusts its head into the sand and refuses to look 
danger in the face. In the meantime the British are 
left behind in the race and Glasgow merchants have to 
try the puerile and utterly futile device of getting up 
a boycott against American steel and iron products. 
Such a device, under the circumstances, seems a good 
deal like the attempt of the celebrated Dame Parting- 
ton, as the famous English wit Sidney Smith describes 
it, to sweep back the Atlantic Ocean. She trundled her 
mop vigorously and made a gallant onslaught, but the 
Atlantic was aroused and it is needless to say who was 
the victor. And the American iron trade's invasion of 



718 A GLIMPSE INTO THE FUTURE. 

English markets must result in a victory, unless there is 
a radical change in conditions, which no one can now 
foresee. We study the markets ; we take pains to ascer- 
tain their wants, and it is an axiom of trade that a man 
or nation that supplies the demand, whatever it may hap- 
pen to be, gets the trade. This is a law as inexorable, 
as unchangeable as the laws of the Medes and Persians. 
We are now one of the five great world powers, finan- 
cial and political, with a population second to none ex- 
cept Eussia. That is to say, we have a population of 
76,300,000, Germany has 55,000,000, Austro-Hungary 
45,000,000, the United Kingdom 41,000,000, France 39,- 
000,000, Italy 32,000,000, Spain 20,000,000, Kussia 136,- 
000,000, Japan, 45,000,000, India 340,000,000, China 
400,000,000. The Mongolian race is numerically power- 
ful, but in the long run can the yellow race stand up 
against the white? I doubt it. Meantime the popula- 
tion in this western home of the Caucasian race is stead- 
ily increasing. In 1800 the United States had a popu- 
lation of only 5,308,483. It is now 76,304,799. Then 
we had sixteen states. Now we have forty-five. Then 
our territory consisted of 909,050 square miles. It is 
now 3,846,595 square miles. We have practically a new 
race made up of an amalgamation of all branches of 
the Caucasian race, speaking the English tongue, which 
in my judgment is destined to be the one tongue spoken 
in the world. It is a people determined to uphold just 
and equitable principles of trade and to have sound 
money. The amount now in circulation is $2,074,687,- 
871, or an increase within three years of $400,000,000. 
Russia has only 26,000 miles of railroad ; we have 190,- 
000. In the last fifteen years we have made more prog- 
ress in the things which tend to increase practically the 
term of human life by annihilating time and space and 



A GLIMPSE INTO THE FUTURE. 719 

supplying necessities and comforts of one kind or an- 
other than ever before in our history. We are told that 
what does not happen in a year may happen in a minute. 
Similarly what might not have happened in a thousand 
years under adverse conditions, has happened in fifteen. 

What of the future? In the language of Daniel 
Webster, "the past at least is secure." We see that the 
bank exchanges which in 1888 were $48,750,886,813, 
have risen in 1900 to approximately $92,000,000,000. 
During four years of a sound money Eepublican Ad- 
ministration, exchanges in our clearing houses steadily 
increased from $48,750,886,813 in 1888, to the magnifi- 
cent total of $60,883,572,438 in 1892. But from 1892, 
during four years of Democratic rule, our clearings fell 
from $60,883,572,438 to $51,935,651,733 in 1896, run- 
ning as low as $45,000,000,000 in 1894. From 1896, 
during Mr. McKinley's Administration, we gained on 
an average more than ten billions each year, the ex- 
changes having gone up from $51,935,651,733 in 1896, to 
the surprising sum of $92,037,588,818 in 1900. From 
1888 to 1892 during a Republican Administration, we 
increased our exports $317,787,505, reaching the then 
gratifying figure of $1,015,732,011. From 1892 to 1896, 
during a Democratic Administration, our exports de- 
creased by $152,531,524, falling from $1,015,732,011 to 
$863,200,487. From 1896 down to June 30, 1900, with 
two months estimated, during McKinley's Administra- 
tion, our exports have gone up from $863,200,487 in 
1896, to $1,400,000,000, gaining $537,000,000, or nearly 
doubling ; and of this vast export of $1,400,000,000 more 
than $400,000,000 are manufactured goods, and would 
require in their production more than a million of Ameri- 
can mechanics. 

From the fall of 1888 to the fall of 1892, during a 



720 A GLIMPSE INTO THE FUTURE. 

Republican Administration, national banks gained in 
resources $694,400,000, going from $2,815,700,000 to 
$3,510,100,000. From the fall of 1892 to the fall of 
1896, during a Democratic Administration, the national 
banks lost in resources $346,500,000, going down from 
$3,510,100,000 to $3,263,600,000. From the fall of 1896 
to April 26, 1900, during McKinley's Administration, 
the national banks have gained in resources $1,548,356,- 
000, going up from $3,263,600,000 to $4,811,956,000. The 
increase in both Republican periods was constant and 
gradual throughout, demonstrating, as has been well 
said, the influence and power of far-reaching politics 
which alone can bring about uniform and universal 
prosperity worthy the genius of the American people. 
The Republican party turned over the Government to 
the Democrats in March, 1893, with a bonded debt of 
only $585,029,330, and this was increased to $847,365,- 
130, in times of peace. For the purpose of prosecuting 
the war the debt was increased in 1898 by $200,000,000, 
and now stands at $1,046,048,750, less such an amount of 
the twenty-five millions of 2 per cent, bonds as the 
Secretary of the Treasury may have already redeemed. 
During the last four years of Democratic administra- 
tion, $201,003,808 of gold was exported; while dur- 
ing the first three years of the recent Administration, 
or down to June 30, 1899, we imported $201,071,000, 
making a difference in favor of Republican politics of 
$402,074,808. Look, too, at the per capita circulation 
in the United States. In 1802, it was $5.00; in 1845, 
$9.00; in 1873, $15.85; in 1892, $24.40; in 1900, $26.77. 
As President McKinley pointed out in his message, 
our foreign trade for the fiscal year of 1900 showed a re- 
markable record. The total of imports and exports 
for the first time in the history of the country exceeded 



A GLIMPSE INTO THE FUTURE. 721 

two billions of dollars. The exports are greater than 
they have ever been before, the total for the fiscal year 
1900 being $1,394,483,082, an increase over 1899 of 
f 167,459,780, an increase over 1898 of f 163,000,752, over 
1897 of $343,489,526, and greater than 1896 by $511,- 
876,144. The growth of manufactures in the United 
States is evidenced by the fact that exports of manu- 
factured products largely exceed those of any previous 
year, their value for 1900 being $433,851,756, against 
$339,592,146 in 1899, an increase of 28%. Agricultural 
products were also exported during 1900 in greater vol- 
ume than in 1899, the total for the year being $835,858,- 
123, against $784,776,142 in 1899. 

The imports for the year amounted to $849,941,184, 
an increase over 1899 of $152,792,695. The increase is 
largely in materials for manufacture, and is in response 
to the rapid development of manufacturing in the 
United States. While there was imported for use in 
manufactures in 1900 material to the value of $79,768,- 
972 in excess of 1899, it is reassuring to observe that 
there is a tendency toward decrease in the importation 
of articles manufactured ready for consumption, which 
in 1900 formed 15.17 per cent, of the total imports 
against 15.54 per cent, in 1899 and 21.09 per cent, in 
1896. 

The election of November, 1900, stamped out of the 
minds of the people all fear that any sort of govern- 
mental policy in any way inimical to the finances or 
business or prosperity of the country may be adopted. 
A very great factor in our future development, which 
our people are soon to discover, will appear in the 
building up of the ports of trade on the Pacific Coast, 
which will be so extensive and rapid in progress that 
the Atlantic ports will before long begin to feel the com- 



722 A GLIMPSE INTO THE FUTURE. 

petition of the Western coast of our country. Our 
grasp of the Philippine Islands, and the foothold in 
trade and greater share of confidence in our disinter- 
estedness as regards territorial encroachment which is 
fast gaining in the Chinese Empire, will finally consum- 
mate the preparations for as great business and pros- 
perity for the Pacific coast States as have heretofore 
been enjoyed by those of the Atlantic coast. Soon a 
part of the trade and commerce of the Eastern States 
will be brought into competition with that of the great 
Pacific coast, insomuch that it will appear that indeed 
"Westward the star of empire takes its way." It is the 
foresight of such change in the Pacific States that has 
helped produce such a pronounced electoral result. 

Our country is now passing through a rapid growth 
of progress and power and prestige which will soon 
place her in the leadership of the nations, with every 
means necessary for extending civilization, enlighten- 
ment, commerce and better government over the world. 
We have come to the time when we must take up the 
mighty work of further cultivating and improving the 
condition of mankind, and we will continue this great 
work until our labors shall have brought to pass better 
conditions of government, co-ordination of interests, 
education, and peace and good will among the nations 
of the earth. In the progress of civilization since tht 
dawn of the Christian era, the momentous task of lead- 
ership has devolved first upon Rome, then upon Spain, 
then upon England. It seems to have been reserved for 
the "Young Giant of the West" to complete the tasks 
undertaken, and assemble into one great community of 
interest vast national forces which have been the growth 
of centuries. In due time we shall no doubt finish the 
work and bring peace and good will to men in every 



A GLIMPSE INTO THE FUTURE. 723 

part of the world and prepare men everywhere to turn 
the spear into a pruning hook, the sword into a plough- 
share and to give freedom and protection and prosperity 
to all sorts and conditions of men, and put an end to 
strife between the nations. We believe that such is the 
great office to which we have been called, and that our 
functions as the leading nation of the world have al- 
ready begun. 



■H* 



ALL THE PRECEDING PAGES WERE 
WRITTEN YEARS AGO, AND WHAT FOL- 
LOWS BRINGS THE WORK UP TO THE 
DATE OF THIS ISSUE, MARCH 31ST, 1908. 



CHAPTEE LXIV. 

MY CHRISTMAS ADDRESS TO CUSTOMERS 
DEC. 24, 1906. 

YOU can now realize why we have for so long a period had 
a congested stock market. It started by the accumu- 
lation of Union Pacific by comparatively few people, the 
purchases being commenced in 1903, the panic year, when 
the price dipped to 65. By the time the stock touched 100 
the accumulation was complete. Then the manipulation was 
begun for its advance to 190, at which time the ten per cent, 
dividend was declared, since which the process of distribu- 
tion has been going on. St. Paul, Northern Pacific, and 
Great Northern have gone through a similar process. Prior 
to the declaration of the increased stock issues by these com- 
panies, the larger part of the old stock had been bought up 
by the inside knowing ones, after which the new issues were 
announced to the public. The profit to the holders of these 
stocks can be measured by the market value of the rights. 
Now we all know what the large holdings of these stocks 
meant. The inside magnates having nearly all of them, the 
outsiders were left out in the cold, and were consequently 
in the dark; but now the light of day flashes over the situa- 
tion. You are asked to buy the rights which represent in- 
siders' profits, all of which is water pure and simple. The 
accumulation of stocks has now ceased and distribution is 
under way, and that is why the market has this present fit 
of liquidation, which must go on until completed. Then the 
situation will have righted itself legitimately, and not until 
then. Eemember what I tell you : that the accumulation of 
stock as I have described has produced the present congested 
money market, and the unlocking of the former will, after 



MY CHRISTMAS ADDRESS TO CUSTOMERS. 725 

a short time, unlock the other; then all will be well again. 
The present turbulent waves will pass over without many 
shipwrecks, and then will come calm weather and a smooth 
sea. Patience is a great virtue ; exercise it, and wait for bot- 
tom ; then get in and get rich. 

Gentlemen, this is my Christmas greeting to you. You all 
have my best wishes for a happy and prosperous New Year. 



CHAPTEE LXV 
EDWARD H. HARRIMAN. 

EDWAED H. HAEEIMAN was born on Long Island in 
1848. His father was a clergyman, and the family in 
ipoor circumstances. At the age of fourteen he left school, 
and began his business career in a Wall Street house. Of an 
aggressive and masterful character, with a great capacity for 
hard work and the ability to master every detail, he rapidly 
forged ahead. At eighteen he became partner in a broker- 
age house; at twenty-two bought a seat on the New York 
Stock Exchange. In 1883 he was chosen a director of the 
Illinois Central Eailroad Company, and four years later, 
when he became its vice president, he retired from the broker- 
age business, having amassed what was then considered a 
comfortable fortune. Eor a time, while President Fish was 
abroad, Mr. Harriman was acting president of the Illinois 
Central, and promptly put into execution his idea that the 
way to make a road pay was to put it in the best of physical 
condition, and thus attract traffic by the ability to handle it, 
rather than by cutting rates. This policy afterwards brought 
the Union Pacific up from a financial and physical wreck 
in 1893 to the most aggressive and progressive railroad cor- 
poration of the day, operating, together with the Southern 
Pacific, over 15,000 miles of road, besides controlling the 
Illinois Central, Chicago & Alton, and St. Joseph & Grand 
Island Eailroad companies and the Pacific Mail Steamship 
Company, and owning large interests in the Baltimore & 
Ohio, New York Central, Atchison, Chicago & Northwest- 
ern, and Chicago, Milwaukee & St. Paul roads. Mr. Harri- 
man and his associates were defeated in an attempt to obtain 



EDWARD H. HARRIMAN. 727 

control of the Northern Pacific in 1901, but the Union Pa- 
cific system benefited by this defeat, it is estimated, by about 
$60,000,000. The purchase of Northern Pacific in the open 
market forced the price of its stock up to $1,000 per share on 
May 9, 1901, causing the memorable panic of that date. 



CHAPTER LXVI. 
THE UPS AND DOWNS OF WALL STREET. 

Illustrated by Personal Reminiscences of Its 
Leaders. 

THE mutations and vicissitudes, the ups and downs, of 
Wall Street can be best illustrated by sketches, from 
life, of the career and experience of its leading operators, 
who have often, though not generally, gone up like a rocket 
and come down like a stick. 

I will not begin with those now foremost in the Wall 
Street arena, but go back to Jacob Little, whose name is still 
a household word on the Stock Exchange. 

He died in the sixties, while the war between North and 
South was raging, and he had gradually ceased to be a power 
in the Street after the panic of 1857. He remained a bear 
on the rising tide of currency inflation following the out- 
break of the war, and was submerged and wiped out. 

He was an odd fish — singular in appearance, manner, and 
business methods, but for more than twenty years he had a 
great name in Wall Street. To speak colloquially, he was 
the cock of the walk by self-assertion and common consent. 

He was the successor of Jacob Barker, who came from 
Philadelphia, and was the first great leader Wall Street had 
known. He was trained in his office, and began as a stock 
operator on his own account in 1835. 

The panic of 1837 made his reputation and his fortune, 
for, being naturally a bear, he was largely " short " of stocks. 
That panic swept the whole United States with the besom 
of destruction, and sent prices down to zero. It left him a 
greater bear than ever, a preacher of distrust and a prophet 




HENRY H. ROGERS. 



JACOB LITTLE. 729 

of failure. He thrived on calamity, and grew richer and 
richer during the years of depression that followed that mem- 
orable revulsion. 

From 1835 to 1846 he was in his glory and his prime, 
and no one disputed his leadership in the world of Wall 
Street. But then he met with a great reverse, not, however, 
through continuing to " bear " stocks, but through a " bull " 
operation in Norwich and Worcester Railroad stock. He 
attempted, with a Boston clique, to control it, and personally 
bound himself to the clique, in the sum of $25,000, not to 
sell his stock below 90. 

He went to work to put it up, but it " bulled hard," and 
refused to stay up. So he paid the forfeit, and sold out at 
the best prices he could get, losing a million, which was 
looked upon in those days as ten or twenty millions would 
be now. This was the only large bull operation he ever en- 
gaged in, and it confirmed him in his natural bearishness. 

He more than recovered from this disaster, however, by 
breaking the " corner " in Erie stock not long afterwards. 
He was largely " short " of it, and the cornering clique had 
bought up all the stock on the market. They put the price 
higher and higher from day to day, but Jacob Little re- 
mained unterrified, and refused to " cover " his contracts. 
He was the only one " short " who stood out against the 
cornerers, and made no effort to buy in his stock. The eyes 
of all Wall Street were watching him, and the prevailing 
opinion was that he would be forced to " cover " at a ruinous 
loss, or fail. 

But he had " a card up his sleeve " that the cornerers had 
never suspected, and just when they were expecting his sur- 
render, or failure, at the maturity of his contracts to deliver, 
he produced a big bundle of new Erie certificates of stock 
and filled his contracts by delivering them. These had been 
issued to him in exchange for the company's convertible 
bonds, unknown to the clique, the issue of the bonds with 
the convertible clause being also unknown to them. 

Such a surprise and checkmate Wall Street had never 



730 THE UPS AND DOWNS OF WALL STREET. 

known before, and the " corner " was broken, with resulting 
demoralization and disaster to the cornering clique, and great 
profit and eclat to Jacob Little. But subsequently he failed 
several times on the " bear " side, yet always managed to 
pay in full out of later successes. He was equally generous 
as a creditor, and compromised on easy terms, so as to give 
his debtors a chance to recuperate. Hence he was liked and 
respected notwithstanding his aggressiveness and the havoc 
he often wrought among speculators on the opposite side of 
the market. 

He was a born speculator. Speculation was his daily 
bread. He liked it for its own sake. His ambition was to 
control the stock market, and he was willing to run extra 
hazardous risks to achieve this end. He once said : " I care 
more for the game than the results, and, winning or losing, 
I like to be in it ! " 

It was this feeling that kept him in Wall Street after his 
money power and his prestige of success, as well as his 
health, had passed away. He was out of debt, but without 
money in any considerable amount. He was a mere shadow 
of what he had been, a name and nothing more. Neverthe- 
less, he risked his small operations with zest. But his health 
gave way more and more, and he fainted one morning in the 
board room, in Lord's Court, and his end came not long 
afterwards. 

He said, " I die poor ! " But from the ashes of his estate 
and unsettled accounts his family succeeded in collecting 
about $150,000, which he had neglected to look after, for 
he had always been careless and easy-going in money matters, 
and attached little value to money except for its use in specu- 
lation. He was the very reverse of a miser, for he had never 
cared to hoard. 

It was Anthony W. Morse who gave the finishing stroke 
to the career of Jacob Little, for, while Little was operating 
for a decline in the early sixties, Morse sprang into the specu- 
lative ring as a rampant bull, and bid prices up on the Stock 
Exchange, while it was still in Lord's Court, in a way that 



ANTHONY W. MORSE. 731 

astonished him and the other fossils of the board. They con- 
sidered him utterly reckless. But Morse foresaw that the 
great war issues of United States currency — greenbacks as 
they were called — then being made would inflate the prices 
of stocks largely, and he accordingly, metaphorically speak- 
ing, rushed in where angels feared to tread. 

He became the storm center, the hub, the pivotal point, in 
the wildest riot of stock speculation this country has ever 
known, or probably ever will know again ; and who was he ? 
A slight, fair-complexioned. country lad, he came to New 
York without a dollar, and became a clerk in a stockbroker's 
office. Then he married a woman with some money, and 
induced her to let him speculate a little for her, and wa3 
successful in making something for her, and enough for him- 
self to buy a seat at the Stock Exchange, which then cost 
•only $500, the initiation fee. 

That was in 1862, up to which time he was both insig- 
nificant and unknown. But the bold, dashing style in which 
he immediately began to astonish the natives and rattle the 
dry bones of the fossils, by his rapidly advancing bids for 
railway stocks, showed that he was a man of the time, fully 
up to date. Had he not proved to be right on the market 
he would have been ruined at the start, but the market went 
with him, and it went with a rush that made the old fogies 
of the board say : " Well, well ! this young fellow got the 
start of us — we are not in it ! " 

He first put up Cleveland & Pittsburg with the ease and 
celerity of a man who thought it a mere trifle to handle. 
Then he successfully took hold of Ohio & Mississippi, Rock 
Island, Erie, and Fort Wayne, and put them up in the same 
pyrotechnical and flamboyant way. He, in one day, marked 
Port Wayne up from 118 to 152. He had unlimited con- 
fidence in himself, because he saw that he was on the right 
track, and the Street and the public followed him. He ran 
Pittsburg up from 65 to 108 amid great excitement, and 
bid 100 for the whole capital stock, " seller one year." He 
then sold all his Pittsburg between 96 and 108. His firm, 



732 THE UPS AND DOWNS OF WALL STREET. 

Morse & Co., were overrun with commission business at their 
large ground-floor office in William Street. By the early 
part of 1863 he had punished the bears badly, and made, it 
was estimated, at least $1,250,000, and his career of riotous 
success ran for just two years, during which he was supposed 
to have made enormously. There was a rush to join every 
pool he formed, so great was his prestige. Men crowded the 
sidewalk in front of his office trying to find out what he said, 
or what he was doing, so that they might do likewise; and 
if he gave a " bull " point on any stock, nearly all who heard 
of it acted upon it, feeling confident that it was a dead cer- 
tainty. His fellow-brokers in the board largely followed 
him, like the rank and file, and rag, tag, and bobtail of the 
Wall Street crowd, because he had been always right. Never 
indeed was a Wall Street leader, before or since, more blindly 
followed than Morse. The whole country joined in the mad 
speculation there, and he was on the crest of the wave. 

One night at the Evening Exchange Morse bid 112 for 
10,000 shares of Erie stock, and Daniel Drew sold them. 
Then he bid the same price for 20,000 more, and Drew sold 
them. A day or two later Drew " covered " at a heavy loss. 
When Morse took hold of Ohio & Mississippi he jumped it 
from 49 to 69 in a couple of days. 

Money was cheap and abundant, owing to the currency 
inflation, and speculation so active that many stock houses 
kept a relay of clerks for night work. Meanwhile specula- 
tion in gold was as rampant as in stocks, and hundreds of 
new mining and petroleum companies were launched, and 
the stocks of these were actively traded in at high and rapidly 
rising prices, while old and worthless stocks, like Bucks 
County Lead, were resuscitated and boomed with the rest. 

Clergymen and women were drawn into this whirlpool of 
speculation, and any stock with " gold " in its name went off 
" like hot cakes." One stock was considered about as good 
as another to buy, as all were going up. Morse led the crazy 
multitude in everything, and, among his other achievements, 
he put Eock Island up from 106 to 149, and, in doing so, 



MORSE & CO'S FAILURE. 733 

bought the whole capital stock, which was then only 56,000 
shares. 

Morse's doom was sealed by Mr. Salmon P. Chase, who 
as Secretary of the Treasury sought to stop the wild inflation, 
and particularly the tremendous hull speculation in gold, by 
selling gold for currency, and locking the currency up in the 
Sub-treasury, so as to make a tight money market. This 
had the desired effect, for it made money so scarce and dear 
that it forced the large speculative holders of stocks to sell, 
through the banks calling in their loans, and brought on a 
panic, just at the time when Morse was more heavily loaded 
with stocks than he had ever been before. 

Broken in health, and looking weary and haggard, he tried 
to sell, and this set every one of his followers selling like a 
flock of sheep, and prices tumbled from bad to worse under 
the general rush to realize. Fort "Wayne fell at the morning 
session of the board on that fatal Monday of the Morse 
panic, on the 18th of April, 1864, from 153 to 119. Then 
Morse left the room for the last time, and, going to his office, 
said to his partner, " The game is up ! " Reading had also 
fallen that morning nineteen per cent. ; Pittsburg, seventeen ; 
Hudson River, twenty-three ; and all other active stocks about 
as much. 

This monetary tornado, that found Morse overloaded with 
stocks, there and then swept him out of the Stock Exchange, 
for, knowing that he was hopelessly ruined, he wrote an 
announcement of the suspension of Morse & Co., and sent 
it to the board a few minutes after he had left it. The fail- 
ure proved a very bad one, and the firm was unable to settle 
or resume. Morse was no longer the leader of Wall Street, 
and many of his customers, in a semifrantic condition, rushed 
in upon him and denounced him bitterly. The king had been 
dethroned, never to regain his crown, nor ever to get a fresh 
start. 

Pandemonium reigned during the rest of the day, and at 
the Evening Exchange uptown at night. Speculation had 
been so widespread, and Morse had been so implicitly trusted 



734 THE UPS AND DOWNS OF WALL STREET. 

as a leader, that the collapse ruined thousands, including 
many women, and a raving, cursing mob crowded into the 
Evening Exchange and overflowed into the Eifth Avenue 
Hotel. There was a night of horror in hundreds of homes. 
Morse was upbraided and cursed, and many of his custom- 
ers, as is usual when they lose their money in a broker's 
office, blamed him for their losses. 

Then for a year Morse disappeared. When he returned 
he looked more haggard than ever, and he died poor soon 
afterwards. !Nb one ever accused Morse of being dishonest, 
therefore his Waterloo defeat gained him widespread sym- 
pathy. Eew Wall Street magnates had more friends than 
Anthony W. Morse from start to finish of his career. 

John M. Tobin, who had been a ferry gatekeeper for Com- 
modore Yanderbilt on Staten Island, figured largely as a 
speculator in the gold room, and also as a stock operator, 
during the two years of the Morse campaign, and saw many 
ups and downs. He began to loom up still more after Morse 
sank below the horizon in 1864. He was known to be the 
agent of Commodore Vanderbilt in cornering Harlem stock, 
and shone in Vanderbilt's reflected light, although a large 
operator on his own account. 

The Harlem " corner " was a memorable event. Through 
the winter of 1863-64 the stock had been selling at about 60, 
and Yanderbilt was a director and large stockholder, and, 
moreover, determined to make what he called " a big thing " 
out of it. The road was, however, generally considered of 
little account except for carrying milk. So, in connection 
with his street-railway projects for improving its value, he 
engineered the stock up to 117. He counted upon getting a 
charter from the Common Council ; but its members tricked 
him, and after passing a favorable resolution they sold the 
stock " short " and then rescinded the resolution, and it fell 
to 72. So they made money at his expense. 

He then applied to the Legislature at Albany for a Har- 
lem franchise to lay rails in Broadway; and the legislators 
saw there was room for stock speculation in this. They 




JOHN D. ARCHBOLD. 



VANDERBILT CORNERS HARLEM. 735 

made a favorable report on a bill granting Vanderbilt' s ap- 
plication, and on this Harlem stock rose sharply to 150. 
Then they and their friends, including the !New York Com- 
mon Councilmen, sold it short largely, thinking they had a 
sure thing; and Tobin bought for Yanderbilt all that was 
offered. On March 25, 1864, they voted, by prearrangement, 
against the bill, and Harlem stock fell to 101. 

The sellers of Harlem rejoiced, for they had large profits 
on paper; but Tobin still continued to buy the stock, and 
under his purchases it rapidly recovered. The commodore 
was determined to punish them. Within ten days Harlem 
was up to 150 again. A week later it touched 185, and there- 
after, for ten days, fluctuated between 175 and 200. Daniel 
Drew sold calls on it for 30,000 shares, thinking it could not 
stay up long, and the professional speculators, both in and 
out of the Stock Exchange, took a hand in selling it " short " 
on the same theory. The Morse panic swept over it in April, 
but still it stood up, like a pyramid in the desert, and Tobin 
still continued buying for Vanderbilt. 

In May the price of Harlem was put up to 300. It stood 
at 285 on the day 15,000 shares had to be delivered, and 
they were settled for at this price. Daniel Drew compro- 
mised by paying $1,000,000 to Tobin in settlement of his 
own Harlem " shorts," but the claim against him was 
$1,700,000. He, however, threatened a suit for conspiracy. 
Tobin' s share of the profits of the corner was about two 
millions, and this made him worth three. 

Commodore Vanderbilt chuckled, and disposed of the Har- 
lem road by leasing it at eight per cent, on the stock to the 
New York Central & Hudson when he got control of it. So 
Harlem proved a bonanza to him till the end, and is still one 
of the splendid assets of his descendants. After the " cor- 
ner," Tobin bulled gold on a tremendous scale in the face 
of the Union victories that terminated the war. He bulled 
it from 198 to 211 against the " short " interest at the be- 
ginning of 1865, and then it broke on him so heavily that he 
lost more than $1,500,000. After that he met with a succes- 



736 THE UPS AND DOWNS OF WALL STREET. 

sion of disasters in the stock market, and lost every dollar 
that he had, besides running in debt with his brokers. He 
then retired to live with his sister on a farm on Staten Island, 
and was never seen again in Wall Street. He saw ups and 
downs with a vengeance. So did his contemporary of the 
open board, E. A. Coray, who made and lost about as much. 

Addison G. Jerome had a career in Wall Street more 
brief than that of Anthony W. Morse, but he is still well 
remembered there as a shining light. He entered Wall Street 
as an operator early in 1863, after being a merchant in the 
dry goods trade, and during the rest of that year was called 
" the Napoleon of the public board," so conspicuously active, 
bold, and successful was he in his operations. He was a 
friend and broker of John Tobin's, and cooperated with him 
in bulling Harlem, with the result that he made a very large 
amount of money out of it, first by the rise from 60 to 117, 
when Commodore Vanderbilt was dealing with the "Hew 
York Common Council, and next when he was punishing the 
legislators at Albany for going back on him, as he phrased 
it, in the 1864 " corner." 

He became a brilliant leader, and had a host of followers, 
and was successful in everything he undertook until he bulled 
Michigan Southern, and, with a clique that he formed, bought 
control of it. He put it to high figures, and was sure of his 
position. But Henry Keep, the treasurer of the company, 
and a keen operator in stocks, stepped in, and turned Je- 
rome's success into utter and disastrous failure. 

Henry Keep knew something that Jerome was unaware of, 
namely, that a clause in the Michigan Southern's charter per- 
mitted its directors to increase its capital stock. So he called 
a secret meeting of the board, and an increase of 14,000 
shares was voted. Then, with this increase for future de- 
livery, he sold the stock against it, and borrowed to make 
his deliveries, which made Jerome think Keep was largely 
" short " of Michigan Southern. He and his clique, there- 
fore, kept on buying and advancing the price, while Keep 
kept on selling more and more. The final result was that 



HENRY KEEP, AND ADDISON AND LEONARD JEROME. 737 

Jerome called in all his loans of the stock, so as to force 
the " shorts " to " cover," and that Keep responded by de- 
livering the 14,000 shares of new stock, which caused a fall 
of twenty per cent, in Michigan Southern in one day. This 
involved the loss of nearly all the three millions of money 
Jerome had so quickly made, and killed him as a leader, 
although he was respected as an honorable man. He took the 
loss of his fortune and prestige so much to heart that he sick- 
ened and died in the following year of some obscure disease, 
a virtually ruined man. But, fortunately, during his nine 
months of phenomenal success he had settled enough on his 
wife to keep the wolf from the door. His ups and downs 
were remarkably swift even for WaD. Street. 

Leonard W. Jerome, a younger brother of Addison's, was 
prominent in Wall Street and society, and as the driver of a 
four-in-hand, long before the latter appeared, and continued 
in the Street long after Addison passed away. His career 
was also marked by memorable ups and downs. In 1863 he 
was a large holder of Hudson River Railroad stock, which 
the bears had hammered down to 107. So he formed a strong 
clique to bull it against the " short " interest, and bought all 
the stock that was offered until he had taken nearly all the 
capital. Then he bid up the price gradually till it reached 
175, and made the stock so scarce that he loaned it to the 
bears to make their deliveries, at five per cent, a day. The 
shorts, estimated to represent about 50,000 shares, finding 
there was no help for them, covered at a very heavy loss, 
while Jerome made a great deal of money by squeezing them, 
presumably two or three millions. 

His prestige increased with his wealth, and he became a 
social as well as a financial lion. He had been watching Pa- 
cific Mail since it succeeded the ISTicaragua Transit Company 
in 1856. In 1861 its stock fell to 69, but in the next year 
its earnings were enormous, and 26,000 of its 40,000 shares 
were bought by a combination of operators, mostly its direc- 
tors, who transferred it to Brown Brothers & Co., to be held 
in trust for their benefit for ^.ve years ; and they selected Leon- 



738 THE UPS AND DOWNS OF WALL STREET. 

ard Jerome to bull the stock in the open market. Under his 
manipulation it rose to 160 in thirteen months after he com- 
menced operations for the ring. There was a large " short" 
interest in it by that time, and, to force the " shorts " to settle, 
he put it to 200, and kept it there, and they settled. 

In 1865 Pacific Mail's capital was increased from four 
millions to ten, and yet its stock stood at 240, and it paid 
twenty per cent, a year in dividends. The year after, it was 
increased to twenty millions, yet it sold at 180, with Jerome 
still bulling it. But in 1867 he met his Waterloo in it. To 
use his own words, he had bitten off more than he could chew. 
The company's earnings fell off largely, and its report showed 
assets reduced from thirty-four to twenty-two millions; the 
Government paper-money issues were being rapidly con- 
tracted, and the flood of "water" injected into the stock 
was beginning to tell upon it. Moreover, Jerome had agreed 
to buy the old five-year combination's stock at 160. Owing 
to all this, accompanied by a generally weak stock market, 
Pacific Mail broke, under enormous sales, from 163 to 115 
in a few days on his hands, and he lost practically everything 
he had, except some real estate. After being thus ruined by 
Pacific Mail, Leonard Jerome ceased to be a power in Wall 
Street. He had no longer any prestige there, and soon re- 
tired from it entirely, and died, at the home of his daughter, 
Lady Eandolph Churchill, in London, a poor man. He had 
experienced his full share of the ups and downs of Wall 
Street. 

Pacific Mail was nothing to Leonard W. Jerome after he 
lost his money, nor he to Pacific Mail. The company had 
seen its most palmy and prosperous days, and its water-logged 
stock was heavy on the market. It suffered from reduced 
traffic and bad management, and in 1871-72 its stock had 
sunk to so low an ebb that the directors felt it was necessary 
to do something to mend matters. So, having little of the 
stock, they decided, instead of trying to reelect themselves, 
to give up the ship. They retired to make room for a new 
board in November, 1871, with Alden B. Stockwell at the 



•* COMMODORE " STOCKWELL. 739 

helm as president. Nominally the new board selected him, 
but really he selected them to do his bidding. 

His name was then very little known in Wall Street, but 
he was known to have been a steamboat clerk on Lake Erie, 
and more recently to have married the daughter of Elias 
Howe, the sewing-machine inventor and manufacturer of 
Bridgeport, Conn., and thus acquired wealth and become the 
president of the Howe Sewing Machine Company and the 
Willcox & Gibbs Company. 

He had come to Wall Street to see what he could do, and 
finding Pacific Mail stock down to the 40's in 1871, he 
began to bull it with a vigor that excited some wonder ; and 
the wonder grew when it was found that he had secured stock 
and proxies enough to elect his own board of directors. He 
elected them and himself by a vote of 118,000 shares, and 
became Commodore Stockwell at a bound. His wish was law 
to his codirectors, and the irreverent called it a dummy board. 

With the assets of the Pacific Mail Company under his 
control, and acting for it, he soon managed to get control, 
and become president, of the Panama Railway Company. He 
began, on this acquisition of the Pacific Mail Company, to 
bull Pacific Mail stock anew by making splendid promises. 
In October, 1872, while the company's steamers were foun- 
dering and burning with alarming frequency, he claimed that 
it had increased its property by large purchases, and was 
earning more than eleven per cent, a year in excess of the 
Government subsidy. This, he said, would enable it to pay 
twelve per cent, on its capital stock from January 1, 1872. 
Then he asked for authority from the Legislature at Albany 
to reduce its capital stock from twenty millions to ten, which 
was granted ; but the company never availed itself of this au- 
thority, and to this day its capital remains at twenty millions. 

The stock, that had been as low as 40, responded to his 
"bull" statements and manipulation, for Wall Street saw 
that the intention was at least to put the stock up. It rose, 
after a good deal of see-sawing, to about 107, and Commo- 
dore Stockwell was the sensation of the time in Wall Street. 



740 THE UPS AND DOWNS OF WALL STREET. 

He became, like Leonard W. Jerome, what was called a " big 
swell." He had one of the largest houses in Madison Avenue 
and one of the showiest turnouts in the city, and yet he had 
been commodore for less than a year. 

He did not confine himself to Pacific Mail and the other 
interests mentioned, but took hold of that railway cripple, 
Boston, Hartford and Erie, and bought 30,000 shares of At- 
lantic and Pacific Railway preferred at 25, a stock of uncer- 
tain legal status, although the certificates had been printed 
by the company, because there was no legal authority for its 
issue. But this did not prevent the stock from being made 
active for a short time in Wall Street at prices a good deal 
above cost. 

Before long, however, it became discredited, and so also 
did Boston, Hartford and Erie stock, while Pacific Mail suf- 
fered under fresh losses and reduced earnings. The stocks 
of the three companies were vigorously attacked by the bears 
and they all went down together, Stockwell being unable to 
support them, and all that he had made was lost. This state 
of things involved him in a snarl about the 27,000 shares of 
the Pacific Mail Company's treasury stock, and a compromise 
was the result, by which he is said to have given his note to 
the Pacific Mail Company for $1,140,000, indorsed by the 
Howe Sewing Machine Company. 

Then, at the next election, he ceased to be its president, and 
a new board of directors was elected. He was also dropped 
from the Panama Railroad directorate and the Atlantic and 
Pacific board. He had lost his money and his prestige, and 
there were none so poor as to do him reverence. He led a 
precarious existence as a small speculator afterwards, and, 
not long before his death, failed for a small amount as a 
member of the Consolidated Exchange. 

He was a man of popular manners, and, in describing his 
change of fortune, he humorously remarked : " When I first 
came into Wall Street, it was asked, ' Who is that man Stock- 
well ? ' But I was respectfully spoken of as ' Mr. Stockwell ' 
after I had made a good deal of money bulling Pacific Mail ; 



DANIEL DREW. 741 

and when I was elected president of Pacific Mail, I was 
styled i Commodore Stockwell ' and ' a Wall Street leader/ 
and a great man generally. But when Pacific Mail broke, 
and broke me, I became ' That red-headed cuss Stockwell.' " 
Thus are the ups and downs of Wall Street, and Wall Street 
opinion, illustrated in real life. 

Of all the great operators of Wall Street, however, Daniel 
Drew furnishes the most remarkable instance of immense and 
long-continued success, followed by utter failure and hopeless 
bankruptcy. His early success as a stock speculator was all 
the more surprising because he was an illiterate man, who 
had barely learned to read and to write enough to be able to 
sign his own name in a sprawling, illegible hand. 

He had been a cattle drover, and after that the keeper of 
the Bull's Head Tavern, at the New York Cattle Yards, and 
was without any experience of banking or Stock Exchange 
affairs when he first came into Wall Street; and he never 
even read a newspaper. But he succeeded in making money 
from the start, and then joined others in putting capital into 
Hudson River steamboats; and his investments in these be- 
came large and proved very profitable, although he knew 
nothing about running steamers himself. 

His shrewdness enabled him to make millions by stock 
speculation, and before long, without knowing anything of 
the stock brokerage business except as a customer, he entered 
into a Stock Exchange partnership, his firm being Drew & 
Robinson. Eor many years this house was prosperous and 
prominent, and Drew, after it was dissolved, and when at 
the summit of his prosperity, said to a friend who rated him 
at twenty millions, " I guess sixteen will cover it." 

After that Drew's cunning and sagacity seemed gradually 
to fail him. He met with a succession of disasters through 
bad judgment, but was more liberal than before in endowing 
the Drew Theological Seminary and other Methodist institu- 
tions. Yet, instead of giving the endowments in cash, he gave 
his notes for them, and paid interest on these. The conse- 
quence was that when he finally lost every dollar that he had, 



742 THE UPS AND DOWNS OF WALL STREET. 

and was declared a bankrupt, without any assets, the notes 
were worthless. While in this bankrupt condition and de- 
pendent for a home on his son, he died, and his death was as 
unnoticed as that of any other Wall Street wreck. He had 
gone out of sight, and out of mind, when his money was gone. 
Never did anyone go further up or further down in Wall 
Street as a stock speculator than Daniel Drew. 

Charles F. Woerishoffer was a brilliant Stock Exchange 
operator, who made a large fortune out of nothing and then 
lost most of it again by overstaying his market as a bear after 
the panic of 1884. 

James R. Keene came to New York with several millions, 
made out of mining stocks in California at the time of the 
great Bonanza gold discovery at Gold Hill, when Flood and 
O'Brien, Mackay, and John P. Jones made their millions. 
But Keene, after adding to his " pile," lost all he had through 
overextending his operations in bulling stocks and grain in 
the eighties. He, however, got a fresh start through being 
employed by large interests to manipulate stocks for them, 
and after several more ups and downs he is rich again. 

Henry "N. Smith, a former partner of Jay Gould, made 
five or six millions as an operator in stocks, only to lose them 
again and die poor. The brief meteoric Wall Street career 
of Ferdinand Ward, who lured General Grant into forming 
the firm of Grant & Ward, is well remembered. He went 
up so high that when he came down he landed in Sing Sing 
prison. Fish, the president of the Marine Bank, did the 
same, after being long in good repute. 

It is unnecessary to dilate on any of the Yanderbilts, or 
Goulds, or Russell Sage, or Henry Keep, or Henry Villard, 
or William E. Travers, because they had no totally over- 
whelming reverses in their Wall Street career; but John F. 
Tracy, the president of the Rock Island Railroad in the six- 
ties, was ruined by his stock speculations after being worth 
more than five millions, and he had to relinquish his presi- 
dency, and died in poverty. Cyrus W. Field, too, lost 
nearly all his large fortune through overloading himself with 



BLACK FRIDAY. 743 

Manhattan Kailway stock ; and Addison Cammack, the Ursa 
Major of Wall Street, died worth little in comparison with 
what he had once possessed. 

How violent the vicissitudes of Wall Street are at times 
we may easily infer when we recall the tremendous convul- 
sion produced by the gold conspiracy of Black Friday, on 
September 24, 1869, which involved thousands in enormous 
losses, and caused both the Stock Exchange and the Gold 
Clearing House, and Gold Exchange Bank, to be closed; 
or when we think of the devastating Northern Pacific panic 
of May 9, 1901, or of the far-reaching and long-continued 
havoc worked by the panic of 1873. 

The memorable failure of Jay Cooke & Co., early in the 
last-mentioned panic, will be recalled by many as vividly as 
the collapse of the Ohio Life and Trust Company that started 
the panic of 1857. 

All these reminiscences of the ups and downs of Wall 
Street will serve to remind my readers that, while it is often 
easy to make money, it is still easier to lose it. Therefore, 
boldness should be always tempered with caution in the pur- 
suit of the Almighty Dollar in Wall Street. 



S" 



CHAPTEE LXVII. 

RECENT WALL STREET BOOMS. 

The Eesistless Power Behind the Market. — The Ad- 
vent of Governor E. P. Flower. — How Stocks 
were Boomed with a Dash. — A Sudden Death 
Averts a Big Panic. — Mr. Morgan as a Eailway 
Eeorganizer. — How Bannigan Unloaded His Eub- 
ber. — Millions Won Only to be Lost. 

WALL STEEET, after the election of McKinley, en- 
joyed a boom such as it has seldom known. Prob- 
ably the most interesting feature about this boom was that 
it was not in any sense spectacular. In that respect it is 
unique. Prices of stocks went higher and the intrinsic value 
of most of them was greater than ever before. The market 
had all the qualities that normally would cause intense ex- 
citement and focus the attention of the entire country on 
the Stock Exchange. Yet in spite of these conditions the 
Street was in a normal state of mind, and it is doubtful if 
the general mass of the people, who get their information 
from the newspapers, were aware that there was even an 
ordinary boom in Wall Street. This unusual condition was 
due, I believe, to the fact that the boom we were enjoying 
was built on a foundation that reached clear to the bowels 
of the earth. There was nothing unnatural or artificial 
about it. Wall Street, instead of being the center, is simply 
one of the centers that reflects the general prosperity 
throughout the country. Farmers, merchants, mechanics, 
mill workers, and miners are all so intent on keeping pace 
with the^progress in their own pursuits that they have no 
time to cast eyes our way. The same conditions that boom 



THE STANDARD OIL COMBINATION. 745 

stocks may boom everything else in the country at an equal 
rate, so that we are in nowise deserving of special attention. 

Another factor, too, had developed in the Street that pre- 
vented the usual excitement and hurly-burly incident to a 
rising market. This was the absence of a pronounced central 
figure. Usually a boom centers about some one man who 
stands boldly out in the open, and whose hand is known to be 
manipulating values. But then the manipulation was being 
carried on by a method that was as quiet as it was novel and 
unusual. That the market was being manipulated was ap- 
parent enough even to the most casual observer. But the 
source of this manipulation was probably known to only a 
few. 

They knew that a new order of things had come, due to 
the most powerful influence that had ever manifested itself 
in Wall Street. This influence was very largely composed 
of the Standard Oil combination, who introduced in their 
Wall Street operations the same quiet, unostentatious, but 
resistless measures that they had always employed in the 
conduct of their corporate affairs. The heretofore conspicu- 
ously big operators were mere tyros beside the men who are 
running things for us now. 

At his best, Jay Gould was always compelled to face the 
chance of failure. Commodore Vanderbilt, though he often 
had the Street in the palm of his hand, was frequently driven 
into a corner where he had to do battle for his life; and so 
it was with every great speculator, or combination of specu- 
lators, until the men who control the Standard Oil took hold. 
With them, manipulation has ceased to be speculation. Their 
resources are so vast that they need only to concentrate on 
any given property in order to do with it what they please ; 
and that they have thus concentrated on a considerable num- 
ber of properties outside of the stocks in which they are popu- 
larly supposed to be exclusively interested is a fact well 
known to everyone who has opportunities of getting beneath 
the surface. They are the greatest operators the world has 
ever seen, and the beauty of their method is the quietness and 



746 RECENT WALL STREET BOOMS. 

lack of ostentation with which they carry it on. There are 
no gallery plays, there are no scare heads in the newspapers, 
there is no wild scramble or excitement. With them the 
process is gradual, thorough, and steady, with never a waver 
or break. How much money this group of men have made it 
is impossible even to estimate. That it is a sum beside which 
the gain of the most daring speculator of the past was a mere 
bagatelle is putting the case mildly. And there is an utter 
absence of chance that is terrible to contemplate. This com- 
bination controls Wall Street almost absolutely. Many of 
the strongest financial institutions are at their service in sup- 
plying accommodations when needed. With such power and 
facilities it is easily conceivable that these men must make 
enormous sums on either side of the market. So far, fortu- 
nately, their manipulations have all been one way — upward ; 
and in conjunction with the general prosperity this has re- 
sulted in making large sums of money for nearly everybody 
in the Street. 

Here and there we have heard of losses, some of them fairly 
large, but in comparison with the general money-making these 
are hardly to be taken into consideration. 

The last preceding boom that Wall Street had enjoyed 
was as different from this as it is possible to imagine. It 
had all the elements which this one had not. It centered 
about one man who stood out in the lime light clear and dis- 
tinct. It kept the Stock Exchange in a constant state of fer- 
ment. It filled the newspapers with column upon column of 
sensational stories. It made millions for an army of retain- 
ers, on paper, and it kept the market jerking up and down 
for months. 

Eoswell P. Flower, ex-Governor of the State of New York, 
was the leader of the boom, and a more picturesque figure had 
never been seen in Wall Street, which is saying a great deal. 
Mr. Mower was an individual of a very plain exterior. He 
often used language that was noticeable more for its force, 
directness, and emphasis than it was for polish. He was 
rarely seen without a huge quid of tobacco that almost filled 



EX-GOVERNOR FLOWER IN WALL STREET. 747 

the left side of his mouth. Spittoons were an essential part 
of the furnishings of his office. His clothing hung on his 
person not unlike meal sacks. His hat was rarely brushed, 
and for days at a time, apparently, he forgot to shave. Alto- 
gether he was the last person, in appearance, who would he 
expected to lead in a district that is famous for its well- 
groomed men. His education was certainly not collegiate. 
All these factors the ordinary man would have judged to be 
handicaps, yet they were Mr. Mower's strongest aids. The 
lack of artificial polish gave people confidence in his state- 
ments. His limited education enabled him to think clearly 
along certain lines without being hampered by mental digres- 
sions, which would probably have come with a higher mental 
culture. 

As the administrator and manager of the estate of his 
brother-in-law, Henry Keep, he came into the Street about 
twenty-five years ago. He controlled a large amount of 
funds, which by conservative direction he increased very sub- 
stantially. He scarcely ever figured in the speculative field 
to any great extent until after he had completed his term as 
Governor of New York State. When he returned to the 
Street from Albany he naturally came with a considerable 
prestige. Ex-Governors of the Empire State are not very 
plentiful in and about the Stock Exchange. He also brought 
with him a large political following. In both of the great 
parties in ^New York State there are many men of standing 
and influence who like to take a flyer in Wall Street. Almost 
to a man they associated themselves with Mr. Flower, who, 
during his term at the capital, had made hosts of friends with 
Eepublicans and Democrats alike. He also had close associa- 
tions with most of the big capitalists. 

After he had settled down to business, on leaving politics 
behind, Mr. Flower picked out several stocks as his special- 
ties. Under his manipulation all these properties went up 
and soon began to show a big advance, unusual strength, and 
great activity. The bears made frequent assaults on his posi- 
tion and now and then pushed him toward the wall, but he 



748 RECENT WALL STREET BOOMS. 

always fought his way to the front again, and came out mas- 
ter in every encounter. When he had himself pretty well 
intrenched in the specialties he was handling, he suddenly 
plunged into Brooklyn Rapid Transit, and for months he kept 
things stirred up in a way that even Wall Street has seldom 
seen. He picked up the stock commencing at 6 and in an in- 
credibly short time ran it up to over 138. Almost every 
politician in the State made a fortune on paper. Mr. Flower 
was immensely popular with the Wall Street news reporters, 
who helped his boom along through the glowing accounts they 
wrote from day to day. 

Under the impetus of the swirl in Rapid Transit, practi- 
cally every property in the Street went flying upward, until 
the end did not seem to be in sight. The bears were beaten 
to a standstill every time they showed their heads. The only 
result of their attacks was that Flower stocks would jump up 
a notch higher. The ex-Governor preached Americanism and 
confidence, until everybody believed that if a stock were only 
grounded, and the property located in America, you could 
buy it at any price and still be on the safe side. 

That a terrible panic did not grow out of this boom was 
due only to one fact: Mr. Flower's sudden death. Had he 
lived thirty days longer the bubble must have been pricked, 
and the result would have been disastrous. Mr. Flower 
went to the country for a day's rest, ate freely of ham and 
radishes, and washed his frugal meal down with a copious 
supply of ice water. He died, a few hours afterwards, of 
an attack of acute indigestion. His death alone saved the 
Street. 

The Rockefellers, the Vanderbilts, and his other wealthy 
friends rushed into the market with millions and sustained 
values. They were in a position to attribute the threatened 
reaction to his death, and pointed out the absurdity of letting 
such an incident affect the value of stocks. They discounted 
the break that must have come, in the natural course of 
events, under the forcing process that was going on. Reason- 
ing such as this, spread broadcast through the papers, stopped 



THE FLOWER BOOM. 749 

the break. Where the bottom would have fallen out entirely 
there was virtually but a moderate break all along the line. 
The small speculators, operating on moderate margins, were 
of course wiped out almost to a man; but most of the big 
fellows were saved. It is probably the only instance on record 
where the death of a big operator saved a general smash. 
Those hurt were numerous politicians and small-fry operators 
who, instead of getting away with snug fortunes in the shape 
of profits, lost everything. 

An interesting incident of the Flower boom was the way 
it was involuntarily helped along by young Joe Leiter. Leiter 
himself, although he had gone to the wall some time previ- 
ously, had indirectly brought about certain conditions that 
served Mr. Flower's purpose admirably. These conditions 
were the general release of hundreds of millions of dollars on 
mortgages on farm lands. When Leiter began to corner wheat 
it was ruling down in the neighborhood of sixty cents a bushel. 
He lifted it to considerably over a dollar before he went broke. 
This enabled thousands of farmers to realize on their crops 
at the dollar figure and above, which brought prosperity almost 
overnight to the wheat-growing belt. With the money real- 
ized from their wheat they paid off their mortgages to the 
extent of two or three hundred million dollars. These mort- 
gages were generally held in the East. This released that 
much Eastern capital, causing a vast volume of money to seek 
investment. The men controlling this money were overjoyed 
when Mr. Flower made an opening for them through the Wall 
Street boom, and hence it was comparatively easy, for a time, 
to push up values. 

Mr. J. Pierpont Morgan, now a noted character in the 
Street, was trained as a clerk in the one-time famous banking 
house of Duncan, Sherman & Co. Later he made a connec- 
tion with Anthony J. Drexel, probably the wealthiest banker 
of his time in America. Out of this connection grew the 
house of Drexel, Morgan & Co., with Mr. Morgan as the man- 
aging partner in New York. When Mr. Drexel died, Mr. 
Morgan absorbed the entire business, and a few years later, 



750 RECENT WALL STREET BOOMS. 

when his father died, he became the head of the London house 
of J. S. Morgan & Co. as well. 

This put him in a very prominent position. He soon there- 
after demonstrated his influence by reorganizing the bankrupt 
[Richmond and West Point Terminal Railway and Warehouse 
Company, changing its name to the Southern Railway Com- 
pany. A number of small roads were added to it, many of 
which were in financial straits and practically all of which 
had been badly managed. He combined them into one sys- 
tem under one head. Mr. Morgan next turned his attention 
to the reorganization of the Reading and the Erie roads, 
which were in a bad way. He soon produced order out of 
chaos there, and that resulted in a boom in railroad stocks 
all along the line. He had several sharp tussles, however, 
with some of the big stockholders, who tried to stand out 
against him because they thought his plans too drastic. 

The people who followed Mr. Morgan's lead in these trans- 
actions generally made money. 

A different sort of deal was engineered a few years before 
by Mr. S. V. White, popularly known as Deacon White, be- 
cause of his position as a deacon in Plymouth Church. Mr. 
White is one of the oldest operators in the Street, and one of 
its most striking figures. He has made half a dozen great 
fortunes in speculation and lost them, but he is as undaunted 
as ever, and in spite of the fact that he is now over seventy 
years old he is still active daily in the market. 

Probably one of the most unique stock deals ever carried 
out in the Street resulted from the transaction of Joseph Ban- 
nigan when President of the Rubber Trust. The history of 
this deal, which for a time resulted in a great boom in indus- 
trials, has never been told, and is known to but very few 
persons, most of whom, by the way, were its victims. 

Bannigan was an uneducated Irishman. He began life in 
a "New England rubber factory and conscientiously worked 
his way up from a wage of $1.50 a day to die worth 
$5,000,000. He was shrewd and bright and knew the value 
of money. He saved to such good purpose that when the 



BANNIGAN AND THE RUBBER TRUST. 751 

Kubber Trust was formed be was at tbe bead of one of the 
biggest factories in tbe country, located in Providence. His 
knowledge of tbe trade was so tborougb that, despite the fact 
that be almost invariably used small " i's " in writing a let- 
ter, he was made president of the trust, his holdings amount- 
ing to about 40,000 shares. When matters had been moving 
along for some time, Bannigan made up his mind that the 
other men in the trust, the big fellows, were not treating him 
right, and that the best thing he could do was to get out. So 
he packed his stock certificates in a gripsack, left Providence 
on the night boat, landed in New York bright and early, had 
his breakfast, and then made a bee line for a stockbroker's 
office. He had assured himself in advance that this stock- 
broker was to be relied upon, and so he told him frankly what 
he intended to do. 

" I want to sell out, bag and baggage," he said. " I want 
to get rid of every one of my 40,000 shares. Here they are ; 
put them on the market and sell them." The stockbroker told 
him that that would never do. If he wanted to realize full 
value for his holdings he would have to go about it in a dif- 
ferent way, for if he should throw his 40,000 shares into the 
market it would knock the bottom out of prices, and he would 
get little or nothing for his stock. Mr. Bannigan saw the 
point and asked what he ought to do. 

" Buy," said the broker. 

" But I don't want to buy ; I have got more now than I 
want." 

" That is all right ; buy anyway ; that will make a market 
for the stock, and you can unload when the time comes." 

" How much must I buy ? " 

" Oh, about $250,000 worth." 

" But I have not got $250,000 in cash to go and buy rubber 
stock." 

"Well, you can borrow it; a man in your position, Mr. 
Bannigan, will have no difficulty in borrowing $250,000." 

Much against his will the old man was finally persuaded 
to do as he was told. About two weeks later the broker wrote 



752 RECENT WALL STREET BOOMS. 

to him that he must buy some more — this time $200,000 
worth. Mr. Bannigan used rather strong language, but finally 
yielded as before. He borrowed $200,000 and turned it over. 
With this additional capital to work on, the broker continued 
to manipulate the market. The insiders soon discovered that 
some strong party was buying, but they did not know who, 
Bannigan having carefully kept himself in the background. 
His broker operated skillfully in the stock, one day buying, 
the next selling, to keep the stock active. The broker after a 
while began to borrow large amounts of the stock. This con- 
vinced the insiders that there was a big short interest some- 
where, and they got together in order to squeeze the shorts. 
The inside holders who controlled most of the stock combined 
to squeeze " the shorts " out. In furtherance of this plan they 
put the price up to 61, and at about that figure Bannigan' s 
stock was all unloaded. Bannigan now found himself full of 
money, while the other fellows were filled up with his stock. 
They never awakened to the fact that the president had sold 
out on them until his shares were delivered against their pur- 
chases, as they thought, of " short " stock. Bubber broke and 
did not stop tumbling until it had gone from 61 to 16. 

This deal had all the elements of a comedy-drama, and the 
playwright who can do it justice will find material there 
which will make him an everlasting fortune and reputation. 

It is not often, however, that newcomers in the Street fare 
as well as this in the end. For a time they will go on merrily 
enough, and send things booming, but in the end most of them 
get the worst of it. At the risk of repeating myself, I will 
say here : 

Mr. A. B. Stockwell is a good illustration of the truth of 
this. At one time he was worth many millions of dollars. 
His start in life was as a purser on a Lake Erie steamboat ; 
his father, it is said, kept a livery stable in Cleveland. On 
one of his trips Stockwell was in a position to show consider- 
able attention to Elias Howe, the inventor of the eye at the 
top end of the sewing-machine needle. Mr. Howe was accom- 
panied by his daughter. Stockwell made himself agreeable to 



STOCKWELL RUINED BY PACIFIC MAIL. 753 

Miss Howe also, and with such good effect that he managed 
to win her affections, and soon thereafter married her. 

When Mr. Howe died, Mrs. Stockwell came into possession 
of her father's millions. With this nest egg Stockwell started 
in Wall Street, and before anyone realized what had hap- 
pened he was the most talked-of man in the district. He put 
all his wife's millions in Pacific Mail stock, secured entire 
control of the company and elected himself its president. He 
came into the Street as plain Stockwell. Then, as the news 
of his liberality and good-fellowship spread, he became Mr. 
Stockwell. After he got hold of the Pacific Mail he was Com- 
modore Stockwell by common consent. Everybody bowed and 
scraped to him, and no man was so high and mighty that he 
was not proud to shake his hand. 

Stockwell took hold of Pacific Mail at about 40 and sent 
it up to 107. It was at this period that he was worth on 
paper over $15,000,000. But he found, unfortunately, when 
it was too late to retreat, that though Pacific Mail was up to 
107 it was not worth that figure when the unloading com- 
menced. 

He was landed high and dry with it all, and the Street told 
him he was welcome to it. He tried to sell, and found that 
there was no market. Then came violent demands on him 
to pay up his numerous call loans, and in order to respond 
he had to sell regardless of price, and thus a whirlpool was 
created which finally sent the stock down to the price at which 
he had begun his original purchases. In this one upset he lost 
all his paper profits and his wife's millions besides. That 
was the most famous boom in the history of Pacific Mail, 
notwithstanding Leonard Jerome's previous brilliant ups and 
downs in that property. 

Leonard Jerome and his brother Addison had a good time 
with Pacific Mail for a while. They ran it up to high figures 
several times, but finally met with the same experience that 
Stockwell did. The two Jeromes, from being among the 
wealthiest and most dazzling operators in the Street, were in 
the end practically wiped out. Leonard Jerome, who was the 



754 RECENT WALL STREET BOOMS. 

father of Lady Randolph Churchill, had nothing left to be- 
queath his daughter except an equity in the house now occu- 
pied by the Manhattan Club on Madison Avenue, which yields 
an income of about $15,000 a year, of which Lady Churchill 
gets $10,000. 

These are a few of the booms that have stirred up things 
in Wall Street at one time or another, as did the Keene, the 
Gould, and the Vanderbilt booms, and the rest I have men- 
tioned. 



CHAPTEE LXVIII. 

WALL STREET'S WILD SPECULATION, 1900-1904. 

McKinley's Reelection and the Defeat of Bryanism 
Set the Big Ball of Speculation Rolling on the 
Stock Exchange. — The Tremendous Volume of 
Speculation by both Large and Small Capital- 
ists. — The Rush to Incorporate New Companies 
and Create Industrial Trusts and Railway Com- 
binations. — The Enormous Capitalization of the 
United States Steel Corporation and Other Com- 
panies in Excess of Real Values. — The Rapid 
Growth and Popularity of New and Old Trust 
Companies and the Effect of Their Competition 
in Eorcing Bank Consolidations. — The Bold and 
Reckless Speculations in Railway Stocks of 
the Newly Enriched Western Capitalists. — The 
Great Northern Pacific Panic of May 9, 1901. — 
The Capture of Control of the Louisville & Nash- 
ville Railway by John W. Gates, and Its Redemp- 
tion by J. P. Morgan & Co., Acting in the Interest 
of the Louisville & Nashville and Southern Rail- 
way. — The Slowing Down of Wild and Reckless 
Speculation in Stocks after September, 1902, 
through the Influence of the Banks and Con- 
servative Bankers, thus Averting Further Infla- 
tion and a Great Convulsion. — The Liquidation 
and Depression of 1903 a Natural Reaction from 
the Intoxication of the Preceding Prolonged 
Boom. — The Great Rise in Cotton and the Col- 
lapse of the Tremendous Bull Speculation Led 
by Daniel J. Sully when He Failed. — The Sud- 
den Fall in the Iron Barometer in 1903, and the 
General Situation in 1904. 

WALL STREET changed with almost magical sudden- 
ness from depression and apprehension to confidence 
and buoyancy with the defeat of Bryan and his silver heresy, 



756 WALL STREET'S WILD SPECULATION, I9OO-I9O4. 

and the reelection of McKinley in November, 1900. Large 
capitalists all over the country began to buy stocks and bonds 
on so heavy a scale that prices shot up rapidly, like the cele- 
brated Gilderoy's kite, and very soon orders poured into the 
Stock Exchange from people of smaller means everywhere, 
and a tremendous bull market for stocks resulted, with too 
many men staking, or ready to stake, their bottom dollar on 
the rise. 

The speculative capitalists and large operators of Wall 
Street, not of course excepting many of the active Standard 
Oil magnates and James R. Keene, naturally availed them- 
selves of this state of affairs to manipulate stocks on a grand 
scale. Having loaded up with them early at low prices, they 
boomed them with vigor ; and we witnessed the beginning of 
a carnival of speculation, and an unexampled rush to form 
combinations of industrial and railroad interests, or trusts, 
and generally to capitalize the concerns taken in for many 
times the amount of their previous capital or real value. The 
stock thus created, after being admitted to dealings in Wall 
Street, was made active and bid up by the promoters to high 
figures to catch buyers, while the public, which had become 
crazy to buy, took it in enormous amounts. It bought in 
haste to repent at leisure, for, I regret to say, most of the 
buyers have it still; and the aggregate loss its shrinkage in 
price represents is to be counted by very many hundreds of 
millions of dollars. 

But it was fortunate for both Wall Street and the nation 
that the inflation which ran riot till September, 1902, was 
then checked by the conservative action and warnings of the 
banks and men like myself, for if it had been allowed to con- 
tinue for another half year it would have ended in a disas- 
trous convulsion, a bursting of the bubble, which would have 
been felt all over the United States, and in every department 
of business, as in and after the panics of 1857 and 1873. I 
was one of the first to sound the alarm and call a halt in this 
dangerously wild speculation in my weekly letter dated Sep- 
tember 13, 1902, in the following words: 



MY TIMELY WORDS OF WARNING. 757 

" A man becomes an inebriate by getting himself into a 
condition where he ceases to recognize effect as following 
cause. Under the influence, at times, of the intoxicating 
beverage he will defy both law and order. This is due to the 
callous condition he has allowed himself to get into. The 
stock market of late has been productive of a similar condi- 
tion of mind with a majority of people. They have been en- 
gaged now for such a prolonged period in buying, buying, 
buying, making profits on all their ventures, as to make them 
like the inebriate, callous to all adverse factors whenever they 
come up. High prices don't frighten them ; scarcity and high 
rates for money don't frighten them ; cautionary signals don't 
frighten them ; strikes don't frighten them. Buying and hold- 
ing on have simply become chronic with them. This may not 
unlikely continue to be the condition of the stock market until 
compulsory liquidation sets in, which the strain in the money 
situation will sooner or later produce. I recommend great 
caution on the buying side, and, better still, not buying at all 
at the prevailing high prices. I see no possibility of relief 
to the money market excepting through the importation of 
gold. The activity of business all over the country, together 
with the moving of the crops, is going to keep money thor- 
oughly employed at high rates from now onward and all the 
way through the new year ; therefore, those who buy stocks to 
carry hereafter, excepting on big concessions from present 
prices, may meanwhile be overtaken with discomfort from 
depreciation in values as well as from the difficulty of obtain- 
ing money at reasonable rates. 

"Henry Clews." 

The intoxication of the time having gradually given place 
to sobriety, and a slow but heavy downward reaction in prices, 
we escaped the violent and widespread panic that threatened 
us, and that would have been inevitable had we not " slowed 
down " in time. As it was, the decline was long-continued 
and severe, and impoverished or ruined hundreds of thou- 
sands of people, including a vast number of formerly very 
rich men. Both big and little speculators became the victims 
of the downward plunge of prices : but the country as a whole 



758 wall street's wild speculation, 1900-1904. 

was saved from serious disturbance and depression — that is, 
from the effects of such a tremendous collapse and crash as 
menaced Wall Street during nearly the entire year 1903. 
This was very fortunate for all our material interests; and 
the conservative element in Wall Street* is to be congratulated 
on having so successfully put on the brakes in time to prevent 
a collapse that would have involved and disturbed the nation 
from the Atlantic to the Pacific. 

The year 1901 was the most remarkable in the financial 
history of the United States, and Wall Street was a theater 
of action whose performances astonished not only the entire 
country, but the world. Their like had never been seen be- 
fore, not even during the great war between North and South. 
It would take volumes to fully describe and give retrospective 
clearness to the leading events of that extraordinary period 
which made the Stock Exchange continually the scene of 
wild excitement, daring manipulation, and unexampled 
inflation. 

To say that Wall Street astonished the natives and made 
conservative business men stand aghast is no exaggeration. 
There were six influential factors actively at work in that 
year, namely, the consolidation of railroad and industrial 
companies at enormously inflated prices, including the disas- 
trous Northern Pacific skyrocket " corner," the restless sea 
of reckless stock speculation that swept the American people 
into its vortex, with all its razzle-dazzle extravagance, the 
transformation of this country from a heavy lender in Europe 
to a heavy and urgent borrower, the partial failure of the 
corn crop, the decline in prices for nearly all the staples ex- 
cept grain and iron, and the collapse in earnings and divi- 
dends of many new industrial combinations. These included 
The Amalgamated Copper Company, and the panicky decline 
in its stock, which impoverished or ruined many thousands 
of investors, it being first run up to 130 and then rapidly 
down to 60 by the manipulators, who sold out and then sold 
" short," and who are said to have made more than fifty 
millions by the up and down movement. Subsequently even 



TREMENDOUS ACTIVITY IN STOCKS. 759 

this low price was cut nearly in two, as the decline did not 
stop until 32£ was reached. 

A mere recital of events as they occurred would he an elo- 
quent serial story to those familiar with the alphabet of Wall 
Street; and there is no more interesting or exciting serial 
story than the stock ticker tells, from day to day, to those 
interested in the stock market, or one that often excites more 
joy or sorrow, or carries with it more weal or woe, prosperity 
or ruin. But the ticker, like Tennyson's brook, will go on 
forever during business hours, for we shall never be without 
a stock market and speculation. 

The transactions of the New York Stock Exchange in 1901 
were so tremendous in volume as to excite wonder. But they 
only represented the speculative spirit, the intoxication of the 
time. The sales in the first half of the year aggregated 
175,800,600 shares of stocks and $637,100,800 of bonds at 
par value, an increase of 109,906,300 shares and $346,900,- 
700 in bonds over the same six months in 1900. 

As prices soared the volume of speculation increased, and 
on January 7th the day's total sales amounted to 2,116,500 
shares, and then went on increasing till they reached 3,271,- 
000 on April 30th. Then came the Northern Pacific bomb- 
shell, the panic of May 9th, when stocks came down even 
faster than Captain Scott's coon, and the actual sales were 
still larger, but owing to the intense excitement, demoraliza- 
tion, and confusion that prevailed, it was impossible to keep 
track of them all, and the ticker registered only 3,073,300 
shares. 

This sudden catastrophe convulsed the stock market in a 
way that alarmed money lenders, destroyed confidence, and 
caused a general rush to sell stocks which brought them down 
with a crash, involving many thousands in ruinous losses. 
The revulsion of feeling, the change in the sentiment of the 
Street was as startling as a violent earthquake, and the con- 
sequences were fraught with grave disaster. Up to the very 
eve of this great convulsion in the stock market the dance of 
speculation had been fast and furious, among both " the big 



760 wall street's wild speculation, 1900-1904. 

men " and the little, and its unlooked-for occurrence reminded 
one of Byron's lines on the Brussels ball, given on the eve of 
the battle of Waterloo, when the sound of cannon unexpect- 
edly boomed above the music : 

" On with the dance ! Let joy be unconfined ; 
No sleep till morn when Youth and Pleasure meet 
To chase the glowing hours with flying feet. 
The lamps shone o'er fair women and brave men; 
A thousand hearts beat happily ; and when 
Music arose with its voluptuous swell, 
Soft eyes looked love to eyes that spake again, 
And all went merry as a marriage bell ; 
But hush! hark! a deep sound strikes like a rising knell, 
Arm ! arm ! it is — it is — the cannon's opening roar ! " 

Fortunately, in the midst of the Northern Pacific panic, 
the financial belligerents combined to stop it. Their com- 
petitive buying for control of the stock had caused the " cor- 
ner." But the extraordinarily high prices to which it was 
bid up by those short of it were reached after the competitive 
buying had ceased for the want of sellers. The contestants 
saw the wisdom of coming to terms to restore confidence and 
check the havoc that was being wrought on the Stock Ex- 
change, where prices had fallen from fifteen to fifty per cent, 
that day, while Northern Pacific common stock had sold up 
to $1,000 a share. So J. P. Morgan & Co., the bankers of 
the Hill-Burlington-Great Northern party, and Kuhn, Loeb 
& Co., the bankers of the Harriman-Union Pacific party, met 
in haste, and came to an agreement as to the Northern Pacific 
stock they had bought, the formal announcement of which 
caused a violent recovery of prices the next day, but not be- 
fore the sweep of the besom of destruction had caused several 
Stock Exchange failures to be announced. The recovery was 
followed by a relapse of equal violence under a fresh rush to 
sell, which carried stocks nearly as low as in the panic, and 
then by a fresh recovery, a usual feature in a crisis where 
credit has been severely shaken and many have been crippled. 



THE SEQUEL TO THE NORTHERN PACIFIC PANIC. 761 

The outcome of this agreement between the two sides was 
the formation of the Northern Securities Company, practi- 
cally as arranged for by J. P. Morgan & Co. and Kuhn, Loeb 
& Co., Mr. Morgan naming the directors by mutual consent. 
Into this repository, or holding company, the Hill and Harri- 
man companies — that is, both sides to the controversy — put 
their Northern Pacific stock, as well as Great Northern stock, 
and the Northern Securities Company later issued its own 
stock to them in exchange for it. 

But when, in 1904, the Northern Securities Company was 
held by the United States Supreme Court to be a violation of 
the anti-trust law, and it became necessary to distribute its 
assets, a new controversy arose. Its directors proposed to 
make an equal, or pro rata, distribution of the Northern Pa- 
cific and Great Northern stocks deposited with it, whereas 
President E. H. Harriman, for the Union Pacific, which de- 
posited the lion's share of the Northern Pacific, namely, 
$78,000,000, wanted all its stock back again ; in other words, 
to eat his cake and have it, too. As this, if assented to, would 
have given the Union Pacific control of the Northern Pacific, 
President Hill, for the Great Northern Burlington system, 
naturally objected, and we all know of the litigation that fol- 
lowed, and in view of the glorious uncertainty of the law, it 
would have been rash to have predicted its final outcome. 

On the Stock Exchange, April was the most active month 
of 1901, the sales aggregating 41,689,200, a daily average of 
1,812,600. On April 24th no less than 652,900 shares of 
Union Pacific were sold. These specimen bricks furnish a 
practical commentary on the rampant speculation then in 
progress. 

The new incorporations of the year represented an amaz- 
ing amount of capital, the total being far in excess of any 
previous year, even that of 1899, when many of the large 
trust combinations were formed. The largest and probably 
the most heavily watered combination launched was the 
United States Steel Corporation, with its $508,478,000 of 
common stock, $510,277,300 of preferred stock, and $304,- 



762 wall street's wild speculation, 1900-1904. 

000,000 of bonds. The mania for organizing new companies 
and making combinations of old ones on largely inflated capi- 
tal spread to every State in the Union, and the promoters of 
industrial enterprises, in particular, seemed to be trying to 
surpass each other in piling Pelion on Ossa in excessive capi- 
talization. Their obvious purpose in most instances was to 
sell the stock to the public, and the poor public took the bait 
and suffered accordingly, for much of the stock in a great 
many of the new schemes became almost entirely worthless, 
both as collateral and in the stock market, and the rest expe- 
rienced very heavy depreciation, and, figuratively speaking, 
like the shaky corporations it represented, went limping along 
with an uncertain gait and a ragged and down-at-the-heel 
appearance suggestive of reduced circumstances and hard 
times. 

In every State there was a flood, if not a deluge, of new 
companies. In New Jersey, 2,346 were formed in 1901, with 
a capitalization of $4,773,702,000, against 2,181 in 1900, 
with a capitalization of $1,350,208,400 ; and in New York, 
Ohio, and Texas the incorporation mills were proportionately 
active in grinding out new companies with fictitiously large 
capital stocks. 

Commercial and manufacturing corporations were practi- 
cally unknown, that is, in any substantial form, in the United 
States till about 1850, and then they followed the develop- 
ment of the railways. In 1848 the first general corporation 
act, known as the Manufacturing Act, had been passed in 
this State, and companies began to be organized under it; 
but the law limited their capital and imposed other restric- 
tions, whereas companies may now be incorporated for a thou- 
sand years with an unlimited amount of capital. The con- 
trast between 1850 and this era of trusts marks the great and 
rapid progress of the country in the interval in population, 
commerce, manufacturing industry, banking, railway build- 
ing, and general material prosperity. 

The growth of trust companies has been the natural out- 
come of our industrial and economic development, and the 



PROSPERITY OF TRUST COMPANIES. 763 

freedom allowed by our laws in monetary affairs. In Eng- 
land, France, and other European countries the laws restrict 
corporation rights and privileges so rigidly that such com- 
panies would find it impossible to do business there as they 
do here. Hence trust companies have practically no existence 
except in this country. How immensely they have prospered 
of recent years the banks know to their cost. In 1882 the 
gross deposits of all such companies in the United States were 
$144,841,000. In 1892 they were $411,659,000; but after 
the new industrial combination era began, in 1897, they shot 
up with amazing celerity, and new companies sprang up like 
mushrooms in all our large cities, and here and there in small 
towns. 

Being competitors of the banks they shared their business, 
and so prevented or limited their natural growth, and forced 
many of the bank consolidations that have since taken place. 
At the end of June, 1902, their deposits had mounted up to 
$1,525,887,000. Here was an increase of $1,114,228 in ten 
years to about half of the total individual national bank de- 
posits of the country, for these on July 16, 1902, were 
$3,098,875,772. Moreover, in the city of New York the 
trust company deposits exceed, or did exceed, the individual 
deposits of the national banks, those of the latter on Septem- 
ber 15, 1902, aggregating $603,565,374, while on June 30, 
1902, the deposits of the trust companies, as shown by their 
semiannual reports to the State Superintendent of Banking, 
were $760,776,124. This comparison is a very suggestive 
revelation of where the money goes and how the trust com- 
panies prosper at the expense of the banks. 

In 1902, again, a few leading factors, or influences, con- 
trolled American finance, and shaped the real financial his- 
tory of the year. These were the good corn crop, following 
the bad one, and other satisfactory harvests ; the overstraining 
of American bank resources to supply the vast requirements 
of the new trust and flotation enterprises when the capital 
and currency of the country were required for its regular 
trade and ordinary business; the enormous increase in our 



764 wall street's wild speculation, 1900-1904. 

foreign importations contemporaneously with a very heavy 
decrease in our exports ; the great rise in the price of the raw 
materials used in our manufactures, as well as in the cost of 
labor ; the strenuous efforts of large speculative capitalists to 
extend and hold permanent control of their respective railway 
and industrial enterprises and undertakings ; the reckless and 
unprecedented Vesuvius-like eruption of speculation in rail- 
road and other stocks by wealthy and newly enriched Western 
stock operators known as " the Chicago Crowd " and " the 
Pittsburg Crowd/' respectively, aided by heavy bank loans at 
high rates; and finally the refusal of the public to follow 
them any longer as buyers. This accords with what I have 
said about the influence of the conservative banks and bankers 
in calling a halt on the wild speculation for a rise which raged 
up to the latter part of September in that year. 

The exploit, in 1902, of John W. Gates, backed by his 
speculative associates, in buying a majority of the Louisville 
& Nashville Railway stock, was his last successful venture 
to make a big haul of millions on the Stock Exchange. After 
that he and they met with very heavy losses in their continued 
efforts to boom stocks. But Mr. Gates was paid a profit of 
ten millions of dollars on his Louisville & Nashville purchases 
by J. P. Morgan & Co., a partner in that firm having made 
the bargain with him at the Waldorf-Astoria Hotel, at three 
o'clock in the morning, after it had been discovered that Mr. 
Gates had really bought control of the stock. 

It transpired, in evidence, that Mr. Perkins had gone there 
at that hour for this purpose, and found Mr. Gates in bed. 
The object in giving him so large an amount above what he 
had paid for the stock he had just bought was to get him out 
of the way as a mischief-maker, for with him in control of 
the Louisville & Nashville, there was no telling what he 
would do to demoralize the Southern Railway system. He 
was looked upon as a bull in a china shop, to be coaxed and 
tempted out, regardless of expense, before he began to toss the 
crockery with his horns. 

So when he said to Mr. Perkins, " As you want the stock 



GATES BUYS AND SELLS CONTROL OF L. & N. 765 

so badly, to keep the Belmont board in control and protect 
the Southern Railway, I will let you have it if you will pay 
me ten millions more than it cost/' the proposition was 
promptly accepted; and the deal was closed on this basis. 
The Louisville & Nashville and the Southern Railway com- 
panies were supposed to have been jointly interested in the 
purchase, but the Gates stock was finally turned over to the 
Atlantic Seaboard Air Line. 

Buying control of the Louisville & ISTashville by Mr. Gates 
was a far bolder operation than President Hill's purchase of 
the stock of the Burlington & Quincy for the Great Northern, 
or than the Moore Brothers' purchase of control of the Rock 
Island and their subsequent great inflation of its stock and 
bonded debt, because Gates bought it merely as a speculation, 
without any desire to manage the road. He was fortunate 
in being able to sell it so easily to those he had frightened by 
his daring coup. 

It is interesting to compare the leading influences, or prin- 
cipal factors, in Wall Street in 1903 with those of 1901 and 
1902. Stock Exchange transactions in that year were very 
much smaller than in 1902, but not nearly as much so as the 
total in 1902 had fallen below those of 1901, the year of the 
greatest activity and excitement in this memorable specu- 
lative period. The sales in 1903 aggregated 161,099,800 
shares, against 188,497,600 in 1902 and 265,945,700 in 
1901. The largest total on any one day in 1903 was 1,539,- 
000, against 1,996,000 in 1902 and 3,202,200 in 1901. The 
largest in any month in 1903 was that of January, 16,002,300, 
agaij.t 26,568,000 in April, 1902, and the smallest in 1903 
wa ^10,731,000 in November, against 7,884,900 in June, 
19u2. 

The barometer of the iron trade was still rising at the 
opening of 1903. Good crops had been gathered and were 
being sold at good prices; railway earnings were large, and 
railway companies were making heavy expenditures for new 
equipment and improvements, and every department of busi- 
ness and manufacturing industry seemed prosperous, with the 



766 wall street's wild speculation, 1900-1904. 

iron trade enjoying its full share of that prosperity. So 
heavy, indeed, was the demand for iron and steel that the 
capacity of our works was unequal to it, and we were import- 
ing iron and steel largely, as we had heen in 1902. 

But in June the iron industry experienced one of its time- 
honored lightning changes. That barometer suddenly fell. 
The demand subsided with surprising celerity in all lines, and 
by November prices in some of these were fifty per cent, lower 
than in January. The boom in the iron trade which com- 
menced in. 1899 was at an end after lasting for foujc years. 
At the end of the year, however, the trade began to revive, 
and 1904 witnessed a slow but steady improvement in it, 
as the reports of the United States Steel Corporation's earn- 
ings have shown. Consequently that highly inflated company, 
after being forced in 1903 to suspend dividends on its com- 
mon stock, was encouraged to continue them at seven per cent, 
on its preferred stock. But this carried cold comfort to the 
hundreds of thousands who had been impoverished by buying 
these stocks at the high prices at which they were floated here 
and in Europe. 

Before the end of 1903 liquidation on a large scale in 
stocks had run its course and exhausted itself, and the mar- 
ket quieted into comparative steadiness ; and in 1904 we 
had, on the whole, nothing more than a dull trading market, 
with the outside public very largely absent. But there has 
been a general tendency toward slow improvement, although 
the net earnings of both railways and industrial companies 
have, on the average, shown a heavy shrinkage, a reflection 
of the reduced volume of trade and more or less indu trial 
depression following the overstimulated boom of previous 
years. Just as 1901 was the year of the most unbridled 
and unrestrained inflation, 1902 witnessed a constant battle 
against the tendency to a downward reaction, and 1903 saw 
and felt the reaction, which was all the more severe because 
it had been so long delayed. 

In the cotton market, however, as wild and extraordinary 
a bull speculation raged in 1903 and the early part of 1904, 



SULLY, THE COTTON KING, FAILS. 767 

under the lead of Daniel J. Sully in New York, and William 
P. Brown and a Southern clique in New Orleans, as ever 
excited the Stock Exchange. Through their manipulation, 
helped by the statistical position of cotton and the prospect of 
reduced production, cotton rose, under an enormous and un- 
precedented volume of transactions, from about eight cents a 
pound here to seventeen cents, with frequent violent fluctua- 
tions, and Mr. Sully was avowedly planning to carry it up 
to twenty cents, when he found his resources insufficient to 
carry, on a falling market, the amount of cotton sold to him. 
So after going up like a rocket, he came down like the rocket 
stick, although his previous profits by the rapid rise had run 
into several millions. It was well that a halt was thus prac- 
tically called to this excited speculation and excessive advance 
in cotton, for it had inflicted heavy losses upon spinners and 
caused the closing of many mills. Sully's failure was the 
logical result of a too daring speculative campaign, and re- 
minds us of that vaulting ambition which overleaps itself and 
falls on the other side. 

Glancing at other countries, I find that Canada made more 
material progress in 1903 than in any previous year in her 
history, business increasing substantially in nearly every 
branch of trade and finance, stimulated by bountiful crops 
and 150,000 immigrants. But in England the continued de- 
cline of British Consols to the lowest prices in a generation 
reflected a low financial barometer, the legacy of the costly 
South African war. France, however, made the best show- 
ing of the year in Europe in finance and general prosperity, 
while in Germany a vigorous industrial revival lifted that 
country out of its previous depression consequent on over- 
speculation and bank failures. 

One question of great interest in relation to our new in- 
dustrial combinations is whether a proper readjustment of 
their hugely inflated capital and excessive charges will place 
them permanently in a condition of efficiency, productive- 
ness, solvency, and prosperity, or whether they will ultimately 
drift, one by one, into the hands of receivers through their 



7o8 wall street's wild speculation, i 900-1 904. 

inability to make both ends meet, or become hopeless wrecks, 
like the Shipbuilding Trust. The same fate is liable to over- 
take many other large flotations into which there was a too 
copious flow of water, supplemented by chicanery and mis- 
representation. Many of these have been organized in dis- 
regard and defiance of legitimate finance, and have exposed 
the stock market and all the monetary interests depending 
upon them to risks and disastrous disturbances inseparable 
from organizations whose foundations rest largely on wind 
and water and on prospectuses and bookkeeping that often 
failed to tell the truth, the whole truth, and nothing but the 
truth. 

It was well that a stop was practically put to the creation 
of such inflated industrial combinations, as well as to need- 
less combinations and highly inflated stock issues among the 
railroads for power and profit and stock- jobbing purposes, by 
the course of the Wall Street banking interest, to which I 
have referred, in coming to the conclusion that the over- 
watering of new companies, the marketing of new stocks, and 
the rise of prices on the Stock Exchange had been carried 
beyond the point of safety, and that the outside public had 
bought more speculative industrial and railway stocks than 
they would be able to carry on a falling market. 

They argued, therefore, that their buying power and their 
inclination to buy were nearly exhausted, and that the stock 
market had become largely a field of action for certain heavy 
and reckless speculators, each of whom had suddenly made 
many millions by the formation of new trusts and railway 
combinations. Some of these had become multimillionaires 
through the early sale of the heavy amounts of United States 
Steel stock they received in exchange for their plants when 
that huge corporation was launched in its sea of water. In 
this they were like some others who enriched themselves by 
their industrial combinations in the West before they branched 
out in Wall Street. 

Very large bank loans to the brokers of these big operators 
were gradually called in and fresh accommodations refused 



THE HEAVY LIQUIDATION OF I903. 769 

them. Without loans it was impossible for them to buy and 
run up stocks to inordinately high prices, as they had been 
doing. Therefore they found that, to a large extent, their 
occupation was, like Othello's, gone. They were eagles with 
clipped wings. 

The heavy liquidation by large and small operators in 
1903 caused a heavy and almost continuous decline in prices 
on the Stock Exchange. Many rich men were compelled by 
this shrinkage and the calling in of their loans by the banks 
to sell out heavy lines of both railway and industrial stocks. 
Not a few of these lost practically all their capital, while 
nearly all the rest sold a large part of their best holdings to 
protect the remainder, which became unmarketable. 

This period of liquidation and depression left Wall Street 
and the country at large in 1904 thickly sprinkled with poor 
rich men, capitalists with a good deal of property, real and 
personal, including stocks, but all unsalable in the market 
except at an almost ruinous loss. Their policy is naturally 
to hold on to what they have left till the tide turns, and if 
they are strong enough to be able to do this they will doubt- 
less meet with their reward. History repeats itself in Wall 
Street as well as elsewhere, and with this prospect in view 
they can cheerfully say, as the old song says, " There's a good 
time coming, boys ; only wait a little longer." 

Meanwhile, those who were active in Wall Street during 
this eventful period of inflation and speculation must note, 
more than others, the vast change that has come over senti- 
ment and opinion in Wall Street and everywhere else. 

Both Wall Street and the outside public have lost the faith 
that they had in many of the stock-market leaders, the men 
who were once followed blindly in their schemes of inflation 
and regarded as omnipotent in their execution. The power 
and prestige of these leaders, for the present at least, have 
passed entirely away, and none are so poor as to do them 
reverence. The devotees of the Street no longer worship the 
old idols. 

Wall Street and the public also lost faith in all new 



770 wall street's wild speculation, 1900-1904. 

ventures and new railway and industrial bond and stock 
issues, as well as in the good judgment and good faith of the 
promoters and corporations concerned. The revelations of 
fraud, chicanery, and excessive capitalization that have been 
made in the courts and elsewhere, have undeceived even the 
dullest and most credulous believers in the schemes and 
schemers that took the country by storm in the days of Wall 
Street's wild and pyrotechnical speculation. 

Out of evil there cometh good, and this great change from 
blind credulity and inordinate inflation to discriminating dis- 
trust and severe contraction has exerted a wholesome effect 
in paving the way to a sounder, safer, and generally better 
state of things both in and out of Wall Street. But mean- 
while one bad sign is noteworthy. The large corporations, 
being unable to market new bond issues, are borrowing heavily 
from banking syndicates at five to six per cent, on notes run- 
ning from one to three years. There is danger in this, and 
the way of the borrower on these terms may, like that of the 
transgressor, be hard. But the end may justify the means; 
and the nation is still growing as rapidly and as grandly as 
ever in our history from ocean to ocean. 

There is nothing to provoke pessimism in the magnificent 
strides we are making in the march of progress ; Wall Street 
is always sure to reflect this progress and our growth in ma- 
terial prosperity, as well as any periods of depression we may 
encounter, for it is the great barometer not only of the coun- 
try and the times, but very largely of the world. 



CHAPTEK LXIX. 
REVIEW OF THE PANIC YEAR, 1903. 

THE year 1903 passed into history with few pleasant 
memories. To a great number of individuals it was 
a year of disappointment and loss. To the very few it was 
a year of golden experience, demonstrating anew that real 
success only comes from rigid adherence to sound business 
principles and abstention from illegitimate speculation. 
Those who remained steadfast to well-established methods of 
finance and business weathered the storms of the year with 
little injury ; while those who defied economic laws and ven- 
tured on the untried highways to success were, later, chiefly 
engaged in repairing battered fortunes and gathering to- 
gether their scattered senses. 

Nineteen hundred and three was chiefly conspicuous as 
marking the culmination and collapse of the great trust move- 
ment which began five or six years ago. The country had 
fairly gone combination mad, both capital and labor emu- 
lating each other in the furious race toward combination and 
monopoly. All consequences were blindly disregarded, only 
the advantages of combination receiving any serious atten- 
tion, and no regard whatever was paid to the workings of 
these huge combinations. Whoever pointed out their inher- 
ent defects, their defiance of natural economic laws, their 
ineradicable opposition to human nature, their socialistic 
tendencies, their opposition to individuality, their inability 
to suppress competition — whoever was bold enough to oppose 
these tendencies on such grounds was swept aside with con- 
tempt and indifference. This phase of the movement, how- 
ever, was by no means the end of the trust mania. It re- 
ceived an enormous stimulus from Wall Street, where the 



772 REVIEW OF THE PANIC YEAR, I903. 

clever promoter quickly discovered in the increased profits 
and power of these combines something new to capitalize. 
These forced profits, together with the premiums paid to orig- 
inal owners for control of good will and for promoters' com- 
missions, were the basis of an enormous overcapitalization, 
the new concerns frequently being capitalized at several times 
their real value. Not lessthan $6,000,000,000 of these new 
creations was made within a few short years, forming the 
basis of a colossal speculation, backed by unequaled financial 
power and launched upon an unprecedented industrial boom. 
It is not the purpose of this brief review to cite instances of 
failure. Fortunately, the losses resulting from inability to 
unload on the public fell chiefly upon those best able to bear 
them, the panic being strictly financial and, fortunately, not 
commercial or industrial. For the original shareholders in 
these combinations who failed to sell, the losses were chiefly 
on paper; but they were sufficiently heavy to seriously crip- 
ple many rich men whose fortunes had been locked up in 
these enormously inflated new creations. Syndicate after 
syndicate was formed to finance these organizations; some 
made fabulous profits, but others were closed out with heavy 
losses, bringing the country to the verge of the greatest panic 
in history. Fortunately, the country's general prosperity 
was only slightly impaired by the tremendous strain thus 
imposed on Wall Street. The storm was finally safely weath- 
ered because of the prudence of our bankers and the strength 
of our national resources, as well as the continued prosperity 
of the farmer, who once more proved himself the backbone of 
the nation. These experiences have effectually killed the 
trust mania, and its revival is exceedingly improbable. Big 
corporations, it is true, will remain, for the reason that they 
are the best known means of doing the world's work ; but the 
era of excessive capitalization of good will, promoters' fees, 
monopoly profits, and the delusions of visionary economists 
is happily at an end. Whether the final days of reckoning 
for the trusts have been seen or not is a question that must 
be left until the ultimate test of business adversity is applied, 



THE BOOM IN IRON AND STEEL. 773 

which we sincerely hope is still far distant At best, the 
future of the industrials is dubious. Along with, and as a 
natural sequence of, the trust movement came the labor move- 
ment. The power of combination once discovered was as 
badly misused by labor as by capital ; even worse, for the de- 
mands of labor were pushed to such extremes of extortion and 
injustice as to throttle business and arouse popular indig- 
nation among those who still preserved some ideas of indi- 
vidual freedom. 

Next to the trust movement the most potent influence in 
the business world was the simply phenomenal boom in the 
iron and steel trade. The world had never seen such rapid 
development before. This was based principally upon the 
enormous demands of American railroads, which have been 
practically reconstructed in order to meet the tremendous 
rush of traffic which the nation's growth has imposed upon 
them. The big car and the big locomotive necessitated heavier 
rails, new bridges, and new terminal facilities; so that hun- 
dreds and hundreds of millions were thus expended, very 
largely out of current earnings, but in many cases, also, by 
the creation of new capital issues. It is probable that the 
heaviest portion of this work has been done, yet much re- 
mains to be completed, and railroads will be heavy buyers 
of steel to continue projected improvements. Another power- 
ful stimulus to the iron trade was the use of the steel frame 
building for office purposes. This meant a revolution in 
office buildings, and the business centers of all our large 
cities are undergoing a process of reconstruction which is 
far from complete, and was brought to an abrupt halt by the 
extortionate demands of labor. In addition to these two 
great sources of demand the uses of iron and steel are stead- 
ily extending with the progress of invention, the cheapening 
of their cost, and the high price of lumber. The iron trade's 
pace was too rapid to last, and the reaction came with unex- 
pected severity in the latter half of 1903, precipitated, of 
course, by the financial reaction, which, along with the labor 
agitation, discouraged all new enterprise. 



CHAPTEK LXX. 

LEADING WALL STREET EVENTS UP TO THE 
FALL OF 1907. 

THE natural result of the panic of 1903, and the long 
period of depression in Wall Street, was that an un- 
precedently large surplus reserve was accumulated by the 
New York banks in 1904, reaching its maximum in August. 
This was still further swelled in 1905, when speculation for 
a rise again assumed formidable proportions, and new high 
records were made in the stock market. Both bank loans 
and deposits reached a magnitude never before known, and 
the activity on the Stock Exchange, combined with that in 
trade, and land, mining, and other speculations outside of 
Wall Street, caused the clearing house exchanges to greatly 
exceed those of any previous year. 

Our foreign imports also increased till they made new 
high records, although our exports failed to keep pace with 
them. This large import trade reflected both the rising for- 
tunes of the rich, who had suffered severely during the de- 
pression of 1903, and the general prosperity. Our imports 
are the barometer of the times. When these are good, they 
are large; but in bad times they shrink enormously, for a 
large percentage of them represent luxuries, and we are a 
luxury-loving people, and, in comparison with Europeans, 
our manner of living is expensive, not to say extravagant. 

Before the end of 1905 the banks of the rest of the country 
followed those of New York in reporting deposits and loans 
larger than ever before, whereas in the early part of it their 
only high record was in the amount of their cash reserves. 
This showed the great demand for loans and discounts to 
meet the requirements of the rapidly increasing volume of 
trade and speculation. 



president Cleveland's gold purchase. 775 

The amount of money available for loans was largely 
reduced in the early part of 1905 by our heavy exports of 
gold. But it was subsequently increased by the issue, up 
to December 1st, of sixty millions in National Bank note 
circulation, which was so much fuel added to the fire of spec- 
ulation, not, however, in Wall Street, as much as in the in- 
terior, where there was a rage for new enterprises of all 
kinds, mostly speculative. Everyone with money enough to 
make a venture seemed to be seeking a short cut to wealth. 

This inland speculation and business activity, particularly 
in the West and South, caused the exchanges or clearings of 
the banks all over the country, except in New York, which 
was comparatively dull, to reach larger totals than ever be- 
fore. Our iron production and foreign imports, at the same 
time, made new high records. 

The gold in the United States Treasury, owned by the 
Government, increased under the tariff on imports from 
$193,072,614, early in 1905, to $291,258,135, near the end, 
and the total amount held by it, including that held against 
outstanding gold certificates, increased to $816,354,352, the 
largest in the Government's history, and also the largest held 
by any government or institution in the world. The next 
largest sum ever held elsewhere was $591,600,000, by the 
Bank of Eussia, in 1898. Yet on January 31, 1895, the 
total amount of gold held by Uncle Sam — that is, by the 
Treasury — was only $97,353,776, and on February 12th 
this had dwindled to $41,340,181, owing to the run on the 
Treasury through fear that the Government might be forced 
to suspend gold payments. But President Cleveland's 
prompt action in selling bonds for gold — to the Morgan-Bel- 
mont syndicate — -averted this possibility. 

Before glancing at more recent events, it is well to refresh 
our memories by looking back at the most conspicuous 
features of the stirring period in Wall Street's history, ex- 
tending from the beginning of 1901 to 1906. In 1901 we 
had a year of extraordinary developments, including new 
company organizations and old company amalgamations, wild 



776 LEADING EVENTS UP TO THE FALL OF I907. 

and reckless speculation by the outside public, heavy bor- 
rowing of European money to carry on this speculation, the 
failure of the corn crop, and, except for corn, a heavy fall in 
the prices of our products. 

In 1902 Wall Street was flooded with new bond and stock 
flotation schemes, all clamoring for bank loans, although the 
activity of trade called for all the loanable capital available. 
Coincidently, there was wild and reckless speculation in 
stocks by newly made industrial millionaires with large bank 
resources and enormous loans at their command. The out- 
side public, however, were not tempted by the bait they of- 
fered. Hence, the banks had an excessive burden of loans, 
all the greater because of the determination, at any risk, of 
the speculative capitalists to carry out their flotation schemes 
so as to control great industrial, railway, and other corpora- 
tions. Meanwhile, there was an immense increase in our 
foreign imports and a decrease in our agricultural exports, 
and a great rise in raw materials and the cost of labor. But, 
fortunately, the year gave us a good corn crop and other sat- 
isfactory harvests. 

Then came 1903 with its train of disasters. Investors 
took alarm at the masses of new securities thrown upon the 
market, and withdrew from it. The securities consequently 
became unsalable, and prices declined rapidly. This forced 
liquidation in bonds and stocks of all kinds, particularly the 
better kinds, to save the poorer from sacrifice by the syndi- 
cates, corporations, firms, and persons who were overextended 
and unable to respond to the calling in of loans by the banks 
and other money lenders. Wall Street was full of " undi- 
gested securities," on which it was impossible to borrow any 
longer. So multitudes of holders had to sell them for what 
they would bring. Then came a heavy decline in iron and 
steel, among other things, an equally heavy reduction of the 
profits of industrial corporations, with many corresponding 
reductions in dividends, and a very sharp contraction in our 
before greatly expanded foreign imports owing to the hard 
times. We had a rich man's panic, and plenty of poor rich 



LARGE SURPLUS BANK RESERVES IN 1904, 777 

men. But, again, we had abundant grain crops, although 
the cotton crop was very short, which resulted in our ship- 
ping more cotton to Europe in the autumn than ever before, 
while its price was abnormally high. 

In 1904 we saw one effect of the depression of 1903 in 
the abnormally large surplus reserves of the New York banks, 
when money on call for about eight months loaned largely 
as low as one per cent. Only four times before had these 
reserves been exceeded. Then came the largest gold exports 
ever made by us. In June the stock market began to recover 
under spirited speculation for a rise, together with much buy- 
ing by investors. But reckless professional speculators car- 
ried prices so high that the market collapsed in December. 
During the year there had been a slow yet general revival of 
trade, in the face of extremely high prices for cotton, re- 
sulting from a short crop and a bull movement, which par- 
alyzed the cotton manufacture, and caused many mills to 
close both here and in England. But happily this was fol- 
lowed by the most bountiful cotton crop we ever had, owing 
to the high price of the staple having stimulated cotton plant- 
ing all over the South. A heavy fall in the price of cotton 
resulted, in which the bull leader failed. But the grain crops 
met with disaster, and were the smallest since 1900, which 
resulted in the highest prices since 1898, and the smallest 
exports to Europe since 1872. The presidential campaign in 
the meantime passed without creating a ripple in the tide of 
Wall Street. 

In 1895, simultaneously with much discussion of the 
world's increasing gold product, we saw both here and in 
the Old World, especially in the latter part of the year, 
unexampled monetary stringency with very high rates for 
money. The surplus reserve of the New York banks was 
wiped out twice, that is, they twice fell below the dead line 
of the required twenty-five per cent, reserve on their deposits, 
while the Bank of England's condition was the lowest since 
1890, and the Bank of Germany's the lowest since 1897. 
Yet we had a very active and excited bull speculation in 



778 LEADING EVENTS UP TO THE FALL OF I907. 

stocks, just as Germany had, despite the high rates for 
money, and its abnormal scarcity consequent on its vast em- 
ployment in trade and speculative enterprises outside of Wall 
Street. 

That the world's increased gold product largely stimulated 
speculation for a rise, both by adding to the amount of gold 
in circulation and the amount of paper money issued by 
the banks against it, is certain. Its effect has not been seen 
in lowering rates of interest, but in lowering its own value, 
or purchasing power, by reason of its increased supply or, 
in other words, by raising the prices of stocks, commodities, 
labor, and whatever else money buys. So the increased 
supply of gold has only quickened the uses for it by foster- 
ing speculation, and the demand for speculation has outrun 
the increased supply of gold — that is, money — and corre- 
spondingly raised interest rates, as well as prices. In 1905 
our national prosperity was crowned with abundant harvests, 
the corn crop having been the largest on record, and that of 
wheat the second largest. This gave a fresh impetus to trade 
and speculative enterprise, with increased railway and in- 
dustrial earnings, and production, especially in iron and 
steel products, at a higher pitch than ever before. Divi- 
dends and reserves also increased in proportion. Russia's 
disastrous war was waged without causing any national dis- 
turbance in Wall Street, and her largely reduced crop of 
wheat helped us to secure better prices for our own surplus 
wheat in Europe. So it is an ill wind that blows no one 
any good. 

In 1905, too, we witnessed the stormy upheaval in the 
Equitable Life Assurance Society, begun by the acrimonious 
duel between President Alexander and Vice President Hyde, 
which led to the general exposure of the waste, extravagance, 
graft, and corruption in life-insurance management, through 
the investigation of the New York Legislative Committee. 
The loss of new insurance business, caused by the popular 
distrust of the companies exposed, had its principal effect 
in Wall Street in their reduced power to buy bonds; and 



ENORMOUS EXPORTS AND NATIONAL PROSPERITY. 779 

the prolonged stagnation in the bond market after they ceased 
to be large buyers was largely attributable to this cause. 
But the exposure was much needed and did great good in 
correcting abuses of power and turning the rascals out. 

Our exports of domestic merchandise kept pace with our 
tremendous industrial prosperity, and these more than doubled 
in the ten years ending with June, 1906. Raw cotton, pro- 
visions, and iron and steel manufactures were exported in 
the fiscal year 1906 to a value exceeding $300,000,000, iron 
and steel showing the largest increase, and seventeen arti- 
cles, or classes of articles, had an export value of from ten 
to forty-two millions. While iron and steel have taken third 
place, raw cotton still holds the first, and provisions the sec- 
ond, and copper manufactures have advanced from the 
eleventh to the fourth place. But refined mineral oil, that 
was third, is now the eleventh, and flour has dropped from 
fourth to seventh, although showing an increase of seven 
millions, and wheat from seventh to thirteenth. 

On the other hand, our exports of agricultural implements 
were five times as great in 1906 as in 1896, which advanced 
them from the twenty-third to the fourteenth place in the 
list. Our cotton manufactures, too, advanced in value from 
twelfth to eighth, that is, from $16,750,000 to $53,000,000. 
There is, however, still room for a great increase in these, 
and the outlook favors a large and growing demand for them 
in China, the Philippines, and South America. We have 
become a great manufacturing and mining, as well as agri- 
cultural, nation, and a lower tariff on raw materials would 
swell our exports enormously. That will come in time ; but 
at present politics stand in the way. 

In 1906 we saw a continuation of the same big bull specu- 
lation in stocks that, with varying fortunes, had been pro- 
gressing since June, 1904, with Edward H. Harriman, 
president of the Union Pacific Railway system, and James 
J. Hill, president of the Great Northern Railway system, the 
most conspicuously dominant figures in the railway, world, 
and, incidentally, in the world of Wall Street. Prices on 



780 LEADING EVENTS UP TO THE FALL OF I907. 

the Stock Exchange, and the rates for money, both on call 
and time, were abnormally high, and still tending upward, 
till both frequently exceeded six per cent, in August, and, 
in some instances, jumped as high as thirty per cent, early 
in September, the excess above six, in the case of time loans, 
being represented by a commission. This, on the eve of 
the usual drain of money westward and southward, to move 
the crop, caused much anxiety for the future, as it was en- 
tirely without precedent in that month. But the Secretary 
of the Treasury, through bank deposits and gold imports, 
was relied upon to relieve the stringency when it became 
more acute later on, under the actual drain of money West 
and South. He did so by renewing his offer, made in April, 
to deposit gold with national banks when secured by bonds, 
to the amount of any gold they wanted to import, the de- 
posits to be returned when the gold arrived. Thus they were 
saved loss of interest in transit, and gold was imported 
largely. 

The money market seemed to have no terrors for the great 
speculative capitalists in control of the stock market. Prices 
were still bid up boldly, and the Harriman and Hill stocks, 
in particular, were marked up to figures never before quoted, 
just as Reading and the other anthracite coal stocks had been 
long before and have been since. 

The chief sensation of the year 1906 in the stock market 
was produced by the Harriman announcement on Friday, 
August 17th, that the semiannual dividend on Union Pacific 
had been raised to ^ve per cent., or from a six-per-cent. per 
annum basis to ten per cent. ; and that an initial dividend of 
two and a half per cent., or at the rate of ^.ve per cent, per 
annum, had been declared on Southern Pacific. These un- 
expectedly large dividends and the delay in making them 
known, after they had been acted upon by the directors on 
Wednesday, and finally on Thursday, greatly excited and 
disturbed Wall Street. They were dividends that staggered 
the bears and astonished the bulls, and caused an advance 
of sixteen per cent, in Union Pacific and five per cent, in 



HILL AND HARRIMAN DOMINANT. 781 

Southern Pacific stock that day. They also made the whole 
market run into a wild bull speculation, stimulated by a 
rush of " shorts " to cover their contracts, and a sudden 
influx of fresh buyers from the outside public. Eeckless buy- 
ing by these made it easy for the bull leaders to run prices 
up sharply, especially as it was expected or feared by many 
that the example set by Union Pacific in dividend raising 
would, or at least might, be followed by certain other large 
companies, both railway and industrial, whether the increase 
was justified by actual net earnings, or only intended for 
stock- jobbing purposes. 

The criticisms of President Harriman and his associates 
to which these sensationally large and peculiarly announced 
dividends gave rise, were too trenchant to bear quotation 
or description. But Mr. Harriman was said to have added 
ten millions to his personal fortune by the rise in Union 
Pacific and Southern Pacific stock, which preceded and fol- 
lowed these very generous distributions to the stockholders. 

The fact that Mr. Harriman, the son of a quiet country 
clergyman, should have been able to come into Wall Street 
and climb the ladder to wealth and power as he has done, 
and with such amazing celerity, shows the unlimited possi- 
bilities of the Street as a gold mine, for the Union Pacific 
Railway system, like the other great railway systems whose 
stocks and bonds have always been dealt in here, was practi- 
cally born and financed in Wall Street. His rise to a position 
of such prominence and vast power is far more wonderful 
even than the career of Russell Sage as a Wall Street money 
maker ; for Russell Sage never had any power but his money, 
whereas Edward Henry Harriman represents and controls 
thousands of millions' worth of other people's property, em- 
ploying tens of thousands of persons. He is a moving spirit 
in dozens of banks and other corporations, including the 
Wells Fargo Express Company, outside of the Union Pacific 
and Southern Pacific system of railways and steamships. The 
great stock market struggle between Harriman and Hill for 
the control of Northern Pacific in 1901 was a battle royal 



782 LEADING EVENTS UP TO THE FALL OF I907. 

on a grand yet disastrous scale, that will always be memorable 
in the history of Wall Street. 

When Kussell Sage died in July, 1906, within a few days 
of his reaching ninety years, leaving not far from a hundred 
millions of money, he left a will which reflected his sagacity 
as a money saver, for he left all he had, except a few unim- 
portant bequests, to his wife. He did so, I infer, instead of 
distributing his great wealth himself, because he knew that 
the State inheritance tax would only be one per cent, on what 
he gave her, while it would be ^.ve per cent, on what he left 
to such relatives as he had surviving, as well as to all others. 

It was, to a certain extent, " the ruling passion strong in 
death/' for, of course, he knew that his wife had no use or 
desire for so much money. Although his bequeathing it to 
her was a tribute to her goodness and a symbol of their happy 
married life, she would probably have preferred to shoulder 
a much lighter load of wealth. Its distribution will be no 
ordinary task, although it will doubtless be a labor of love 
with Mrs. Sage. 

Kussell Sage, in his manner of life, all now agree, set a 
good example of frugality and industry in an extravagant 
and pleasure-loving age, and hence he is held by many to 
have been a public benefactor. His unusually economical 
and plain habits, together with his great wealth and great 
age, naturally made him conspicuous and also a target for 
the wits, and in this way he became better known through 
caricature than matter-of-fact description. But that was one 
of the penalties of publicity. He passed from poverty to 
great wealth entirely of his own creation without being 
spoiled by it, and remained one of the plain, unpretentious 
people till the end. 

He owed all he had to Wall Street, and his career illus- 
trated, more than any other has ever done, how fertile a field 
for fortune making Wall Street may prove to a sagacious 
man, of untiring industry, who knows how to cultivate it, 
and can see and avail himself of its splendid opportunities. 
His rise from extreme poverty to immense wealth, through 



A NEW ERA IN TRADE. 783 

his own unaided exertions, shows how one man, single- 
handed, may do wonders and turn all he touches to gold, 
and that, too, in Wall Street. We are living in a stirring 
and rapidly progressive time, and the great and growing 
importance of the Isew York Stock Exchange was reflected 
by the rise in the price of a membership in it in 1906 to not 
very far from a hundred thousand dollars. 

The year 1906 was one of immense activity and prosperity 
in trade. Prices were high and still advancing, and profits 
large, particularly those of industrial corporations. At the 
same time a mammoth bull movement was running its course 
on the Stock Exchange, and the grain crop turned out larger 
than ever before in our history, while enormous issues of 
new securities were announced by both railway and indus- 
trial corporations. These new issues severely taxed the re- 
sources of the money market, already being too heavily 
drawn upon by the " big men " of the Street to promote 
their wild bull campaign in stocks, and spasms of stringency 
were frequent. Indeed, the year 1906 from beginning to end 
witnessed a continuation of those inordinately heavy demands 
for money from Wall Street and corporations, and these led 
to the disturbed monetary conditions which were first felt in 
September, 1905. It was an eventful year, a year of im- 
mense activity on the Stock Exchange, in which much that 
was unprecedented occurred. It was a year in which the 
stock market, after touching high record prices and violent 
ups and downs, went gradually, in an excited speculation, 
from bad to worse, in a limited sense, or from one critical 
stage to another, till it reached the year's end. Then it aver- 
aged only nine per cent, below the highest prices. But it 
became, in spite of the boldest bull manipulation, gradually 
weaker and more demoralized. The bull movement at length 
met its Waterloo in the spring of 1907, because the plung- 
ing millionaires who had been bidding them up found no 
buyers for their stocks. So they had to liquidate heavily, 
like the rest. It was another rich man's panic. 

Erom a slow and irregular decline stocks good, bad, and 



784 THE COLLAPSE OF MARCH 14 IN STOCKS. 

indifferent passed into the rapids of a bear market, with the 
bears, emboldened by success, recklessly aggressive, and on 
March 14th prices broke from ten to twenty-five per cent, 
under their fierce attacks, and relentless hammering, supple- 
mented by an avalanche of long stock forced for sale under 
stop orders that had been reached, or through weakened and 
exhausted margins, or by holders unwilling to take any fur- 
ther loss. 

Yet enormous as was this paniclike fall in prices on that 
disastrous day, many stocks went still lower in the breaks 
that followed the sharp rally that succeeded it. So March, 
1907, ended as it began, in gloom and depression, which was 
followed by comparative dullness but little recovery in April 
and May. In June, however, it became evident that liqui- 
dation had exhausted itself, and all unfavorable factors had 
been discounted by the decline. Hence, although the market 
was almost entirely professional, with the outside public as 
apathetic as ever, it began to develop an upward tendency, not- 
withstanding the sharp rise in grain and cotton due to the 
extensive damage done by an unusually cold spring, and the 
fact that we shipped $15,000,000 in gold to France in June. 

This vast and thorough liquidation had been mainly by the 
bull pools and richest speculative capitalists in Wall Street, 
and involved tremendous losses. These leaders of the bull 
movement had been caught overloaded with stocks, carried 
over from the previous boom that they had recklessly engi- 
neered. They were forced to sell because the banks were 
either calling in their loans, which they were unable to re- 
place, or calling from time to time for more margin to offset 
the decline in prices. Thus their cash resources were being 
constantly impaired. 

Meanwhile, money loaned at abnormally high rates, and 
five times in the spring, autumn, and winter of 1906 the ISTew 
York banks showed a deficit in their reserve. Money, there- 
fore, was very hard to borrow, because these giants of specu- 
lation had overtaxed the banks' resources by borrowing too 
much. Coincidently the outside public held aloof from the 



HEAVY GOLD IMPORTS AFTER THE " FRISCO " FIRE. 785 

stock market, owing to the great activity of trade and the wild 
speculation in land, mines, building, and other new enter- 
prises all over the country. 

This speculation from Maine to California absorbed an 
immense amount of money, of which Wall Street saw nothing, 
and it left the large speculative holders of stocks without any 
market for them, except among the professional traders. No 
wonder they staggered, and finally, in the spring of 1907, 
succumbed under the heavy loads they were carrying, which 
they had mistakenly bid up to excessively high prices in a 
vain attempt to bring in the public as buyers. Wall Street 
was then the only blue spot on the map of the United States. 

To relieve the pressure for money there, and so help to 
bull stocks, the large interests in Wall Street, excepting J. P. 
Morgan & Co., imported from Europe $40,000,000 of gold 
in the spring of 1906 and $45,000,000 in the autumn. 

This last great importation caused the Bank of England 
to raise its minimum rate of discount from three to four, 
then to five, and then again to six per cent., the highest since 
the Boer War. The rate, it was intimated, would have been 
advanced to seven per cent, had we taken any more of the 
yellow metal. The purchase of so much gold in England was 
made possible only through the Secretary of the Treasury, 
Mr. Leslie M. Shaw, practically advancing the means for 
importing it by lending gold to the banks, secured by collat- 
erals, the loaned gold to be returned when the imported gold 
arrived. 

The spring gold importations followed the great San 
Francisco earthquake and fire, on April 18th, involving an 
estimated loss of $250,000,000. Most of this, however, fell 
upon British, German, and other foreign fire-insurance com- 
panies, which relieved this country financially to a corre- 
sponding extent, although New York shipped more than 
$50,000,000 of gold to San Francisco to fortify the banks 
in that city. 

After the stock market had been sold to a standstill and its 
weak timbers eliminated, by May, 1907, it was only natural, 



786 THE SOUTHERN RAILWAY CONFLICT. 

in view of its previous drastic liquidation and heavy decline, 
that with good crop weather following the backward spring, 
stocks should advance. The keel of a future bull market of 
large dimensions had been laid by the disastrous liquidation 
that had occurred, and we subsequently witnessed its develop- 
ment on a rapidly ascending scale. It is a law of nature that 
action follows reaction. 

This reminds us that Wall Street easily passes from one 
extreme to another, and that very often the dawn is nearest 
when the night is darkest, in finance as well as nature. More- 
over, Wall Street is always with us, just as the poor are, and 
the stock market is a serial story that never ends. 

In July, the improvement in the stock market, and espe- 
cially the Harriman stocks, was very decided, with the indi- 
cations favoring a wider and more active speculation, for as 
yet it was almost entirely professional. In this movement 
the Standard Oil and Harriman party were the bull leaders, 
with Union Pacific the leading stock. Notwithstanding their 
vigorous efforts, however, the outside public remained en- 
tirely apathetic, and there was growing anxiety as to the fu- 
ture of the money market. This was increased by our having, 
unexpectedly, to ship gold to Europe, nearly all of it to the 
Bank of France, as well as by depressed monetary conditions 
there, with much disturbance, under heavy liquidations, in 
London and Berlin. Even British Consols declined from 
week to week, till they touched 81, the lowest price recorded 
since 1848, the year of the Smith O'Brien rebellion in Ire- 
land, when they sold down to 80. 

Then came an angry and threatening contest, and stormy 
litigation, between the States of North Carolina and Alabama 
and the Southern Railway Company, involving also other 
Southern States and railways. The main conflict was be- 
tween the States named and the United States Courts on the 
2J and 2^ cents a mile rate law. This went so far as to 
cause a revocation of the license of the Southern Railway to 
operate its lines in Alabama. The situation for a time was 
extremely critical, but a truce was at length arrived at, the 



THE $29,240,000 STANDARD OIL FINE. 787 

Southern Railway agreeing to obey the State law, and leave 
the ultimate decision to the United States Supreme Court. 

While this disturbing controversy was at a white heat, the 
$29,240,000 fine inflicted by Judge Landis, of the United 
States District Court, at Chicago, on the Standard Oil Com- 
pany of Indiana, fell like a thunderbolt upon not only Wall 
Street, but investors all over the country. This was on Sat- 
urday, the 3d of August, and it looked so like confiscation, 
and so alarmed the large speculative capitalists, who had been 
supporting the stock market, that they at once withdrew their 
supporting orders and, for self -protection, became heavy sell- 
ers themselves of the stocks they held. They foresaw the 
effect of this disturbing decision, and the course of the South- 
ern States towards the railways, upon investors, in causing 
liquidation. Simultaneously, a threatening report from the 
Bureau of Corporations added fuel to the fire of distrust. 

Day after day, for twelve business days, following the 
opening of the stock market on Monday, the 5th, there was an 
almost uninterrupted and very heavy decline in prices for 
both railway and industrial stocks, the best and highest priced 
being the heaviest sufferers, and falling from ten to twenty- 
five per cent. The scare among holders of stocks increased 
as prices declined, and demoralization in the market carried 
these generally below the lowest in the panic of March. It 
was very largely another rich man's panic, due to fears as to 
what might come next to disturb confidence in the value and 
future dividends of both railway and industrial stocks. The 
worst of it was, the innocent were, as usual, made to suffer 
with the guilty. But after a storm there cometh a calm, and 
so it was in this case, and perhaps all's well that ends well. 
But the ordeal was a very severe one, particularly for the 
large holders of stocks, and made the year 1907 still more 
memorable than before. 

Bumors of impending Wall Street and industrial corpo- 
ration failures, as usual in times of disturbance, filled the 
air, but only one important industrial failure and one un- 
important Wall Street suspension occurred in August, and 



788 REDUCED DIVIDENDS, BUT EASIER MONEY. 

the gradual return of confidence caused a gradual improve- 
ment on the Stock Exchange, although the semi-annual divi- 
dend on Southern Bailway preferred stock was reduced from 
2J to 1^ per cent., and the dividends on Erie's first and 
second preferred stocks were declared payable in four per 
cent, scrip warrants instead of cash. Toward the end of the 
month the Secretary of the Treasury announced that weekly 
deposits would be made in the national banks till October 
15th, and this at once began to ease the money market and 
further strengthen confidence. 

Early in September, however, there came a relapse in the 
stock market, and another Stock Exchange failure. This re- 
currence of disturbance and depression was partly due to 
stagnation, followed by demoralization in the copper trade, 
both here and in Europe, which caused a reduction in the 
price of copper by the selling agency of the Amalgamated Co. 
from 25 cents a pound to 18 cents, and not long afterwards to 
15 cents. 

Meanwhile the Calumet and Hecla, the Quincy, and other 
copper companies had reduced their dividends, owing to the 
small demand for copper, and Amalgamated copper stock 
declined rapidly to 57^, against 121 in January. In Boston, 
also, the copper stocks broke in the same demoralized way 
under heavy liquidation. 

Railway shares sympathized with this extreme weakness 
of copper and the copper stocks, but not as much as Ameri- 
can Smelting, the U. S. Steels, and other industrial stocks, 
and gradually the copper crisis ceased to dominate them. 
At the same time the general market for both railroad stocks 
and bonds was strengthened by the great success of the 
$40,000,000 issue of 4£ per cent, bonds by the City of 
New York, the loan being Hve times over-subscribed. This 
showed there was a large amount of money in the country 
awaiting investment in good securities. Yet, later, new low 
records were made for sundry railway and industrial stocks, 
including Southern Railway common and preferred, and the 



REDUCED DIVIDENDS, BUT EASIER MONEY. 789 

stock market, in its nervous and irregular fluctuations, told 
of the timidity of the bulls and the boldness of the bears, 
consequent on shrinkage in the iron trade, and uncertainty 
as to the business future. 



CHAPTEE LXXI. 
THE GREAT CRISIS OF 1907. 

THE worst forebodings of September were far more 
than realized in October, when the monetary disturb- 
ance, and distrust of credits, spread from the Stock Ex- 
change and Wall Street to the banking interests, and in- 
volved the whole country in a panic that will always make 
the year 1907 memorable in our history. 

Until the collapse in the " Curb " market of the stock of 
the United Copper Co., followed, on the 17th of October, by 
the failure of the two Stock Exchange firms that had been 
manipulating this Heinze specialty for Heinze interests, the 
panicky conditions of the year had been practically confined 
to the stock market and the interests directly affected by it. 
But that collapse, involving those Heinze failures, fell like 
a bombshell not only on the stock market, but on the banks 
of which F. A. Heinze, the president of the United Copper 
Co., had, not long before, purchased control. The fact that 
two of his brothers were members of one of the failed firms 
— Otto Heinze & Co. — caused heavy withdrawals of deposits 
from these banks, and particularly the Mercantile National 
Bank, of which he had become the president. 

The New York Clearing House Committee took alarm the 
same day and examined the Mercantile. The result was that 
it demanded the resignation of all its officers and directors 
that night, as a condition preparatory to giving it any as- 
sistance. They complied, President Heinze among them, 
and the bank was assisted to pay its clearing-house balances 
for several days. But these were so large that further as- 
sistance was then refused. Thereupon one of its old direc- 



THE GREAT CRISIS OF I907. 791 

tors succeeded in bringing in new capital and new directors 
on the day following, Sunday, so that the bank was enabled 
to continue business without a break. 

But meanwhile the contagion of distrust was spreading, 
and there was a run on the deposits of not only the Heinze 
but the Thomas and the Morse banks, the Thomases and the 
Heinzes having been equally prominent with Morse in buy- 
ing control of banks for speculative purposes. The Clearing 
House Committee took them all in hand, and demanded the 
resignations of their officers and directors. In this way they 
stamped these bank promoters out of the banks they had 
managed to get control of. Then the banks were assisted. 

Suspicion soon fell upon certain trust companies with 
speculative affiliations, more or less connected with the same 
promoters. Suddenly a heavy and spectacular run upon 
the Knickerbocker Trust Company, the second largest in 
New York, with more than sixty millions of deposits, caused 
it to close its doors on the first day of the run. This was 
on Tuesday, the 2 2d of October. The immediate cause of 
the run was the resignation, on the previous day, of Charles 
T. Barney, its president, coupled with the notification to 
the banks of the National Bank of Commerce, on the same 
day, that it would not clear for the Knickerbocker Trust Co. 
after the following day. So, this being published in the 
newspapers, the depositors rushed to withdraw their deposits. 

The Clearing House and Mr. J. P. Morgan, when appealed 
to, refused to assist the Knickerbocker on the ground that 
they found it was not solvent. The collapse of the Knicker- 
bocker was immediately followed by extensive runs on small 
banks and trust companies in New York and Brooklyn, as 
well as on the savings banks, and about a dozen of the 
former, including seven in Brooklyn, closed their doors. But 
the savings banks took advantage of the sixty and ninety 
days' time allowed them by law for the payment of deposits 
after notice. 

Following these minor banking suspensions there were 
long-continued runs on the Trust Company of America and 



792 THE GREAT CRISIS OF I907. 

its Colonial Branch, and the Lincoln Trust Company, with 
all-night lines of waiting depositors. But, finally, after a 
hard struggle, these were examined by Morgan committee 
experts and found solvent, whereupon, in the banking con- 
ferences held for a number of days and nights at the resi- 
dence of Mr. J. P. Morgan, it was agreed to provide them 
with all the money necessary to meet the run. To Mr. 
Morgan great credit is due for the arduous work he under- 
took to better the banking situation in this critical period 
of storm and stress. 

New low records for stocks were made meanwhile under 
very heavy liquidation, Union Pacific touching 100, and 
Amalgamated Copper 41f , on the 24th of October, and all 
others sinking to lower depths in about the same proportion, 
while the abnormal scarcity and high rates for money caused 
trading on margins to be generally suspended by brokers. 
Transactions were, of course, largely curtailed by being 
placed on a cash basis, but the buying of odd lots for in- 
vestment was very heavy all through the crisis. The decline 
in Amalgamated was accelerated by copper selling down to 
12 cents a pound. But much of the liquidation in the stock 
market was caused by the banks and trust companies calling 
in their loans on stock collaterals, and thus forcing the bor- 
rowers to sell. 

The hoarding of money, and the withdrawal of deposits 
from the banks and trust companies, became so extensive that 
these institutions had little or none to lend, and for several 
days call loans were made on the New York Stock Exchange 
at rates ranging from 50 to 100 per cent per annum, and in 
exceptional instances as high as 125. 

The United States Treasury came to the relief of the 
money market by making — under the personal direction of 
Secretary Cortelyou — unusually heavy deposits in the Na- 
tional banks of the City of New York, as well as in other 
cities which were drawing heavily on their New York bal- 
ances. But still the banks and trust companies continued 
to lose their ordinary deposits rapidly, and the money thus 



THE GREAT CRISIS OF I907. 793 

withdrawn by the timid and distrustful was taken out of 
circulation by being placed in safe-deposit boxes, tin boxes, 
wallets, and other receptacles. This hoarding was foolish, 
as well as harmful and un-American. 

New York had to deal with a banking crisis. So, on 
Saturday, the 26th of October, the members of the New York 
Clearing House met, and resolved to issue, on and after that 
date, Clearing House certificates — bearing six per cent in- 
terest — to be used by the banks of the Association in paying 
their daily balances at the Clearing House, instead of cur- 
rency. These the Clearing House at once began to issue, 
when called for by any bank, to the amount of 75 per cent 
of the value of any acceptable assets it might deposit with 
the Clearing House. This gave immediate relief to the 
banks, and especially those whose reserves of currency were 
most largely depleted, for they immediately availed them- 
selves of their issue. 

At the same time they saw that, in addition to the govern- 
ment deposits, large importations of gold were necessary to 
replace, at least in part, the hoarded money, and aid in re- 
storing confidence. The Clearing House certificates, by re- 
leasing much of their gold and legal tender notes, enabled 
them, through " cable transfers," to purchase gold in Eng- 
land for shipment to New York, and by the end of the first 
week in November $50,000,000 had been purchased by banks 
and bankers for shipment to the United States, and nearly 
half that amount had already reached New York. But some 
of the importing banks were in other cities, including Chi- 
cago, Philadelphia, Boston, Pittsburg, and San Francisco. 

These heavy importations, however, disturbed the London 
money market, and on Thursday, the 31st of October, the 
Bank of England raised its minimum rate of discount from 
4| to 5^ per cent, to check the outflow of gold. This not 
proving sufficient, it raised it to 6 per cent on the Monday 
following, and to 7 per cent on Thursday, the 7th of No- 
vember, a higher rate than had been reached since 1873, the 
year of the great panic in this country and in Germany, 



794 THE GREAT CRISIS OF I907. 

when the Bank of England rate was advanced to 9 per cent. 
But once, in 1866, it went iip to 10 per cent. 

The Bank of France also, on the 7th of November, 1907, 
raised its rate from 3^ to 4 per cent, owing to the drain of 
gold to this country; and such an advance is very rare in 
France. For seven years, up to the spring of 1907, it had 
stood at 3 per cent. The Bank of Germany also advanced 
its rate to 7^, and the Bank of Belgium to 6 per cent. 
These rates showed how severely the loss of this gold was 
felt in Europe. By November 16 our gold purchases aggre- 
gated $70,000,000. 

In the interval the clearing houses in all the large cities 
of the United States had, in self defence, followed the ex- 
ample of New York in issuing clearing house certificates. 
Currency, too, had been selling at a premium ranging from 
2^ to 5 per cent for certified checks, owing to its great 
scarcity. At Pittsburg the Stock Exchange was closed im- 
mediately after the announcement of the failure of the three 
Westinghouse companies there. Other failures were very 
numerous. 

In Pittsburg, Chicago, New Orleans, and many other 
cities, the local clearing houses printed clearing house checks 
of small denominations, from 25 cents or one dollar up, to 
be taken out and paid out by the banks instead of currency, 
when found necessary. Several of the Western Boards of 
Trade closed, owing to the demoralization in the grain mar- 
ket, caused by the heavy decline in prices under the rush to 
sell in order to raise money, while many banks all over the 
country issued their own cashiers' checks for both small and 
large amounts, instead of currency or clearing house certifi- 
cates, in payment of depositors' checks. The banks were in 
a partial state of suspension from Maine to California. 

The extent of the drain on bank reserves may be in- 
ferred from the fact that the statement of totals for all the 
New York associated banks for the week ending on Satur- 
day, November 2, showed that they were collectively $38,- 
838,825 below the dead-line of 25 per cent reserve on their 



THE GREAT CRISIS OF I907. 795 

deposits, without counting Government deposits, which had 
been very large. The detailed statement of each bank's con- 
dition was not published on that date, and continued to be 
withheld till after the crisis had passed into history. 

This large deficit of the Xew York banks caused much 
uneasiness and a further sharp decline in the stock market, 
but the frequent day and night conferences of leading bank 
officers with Secretary Cortelyou and Mr. J. P. Morgan, to 
devise ways and means of relieving the extreme stringency 
and distrust of the monetary situation, were productive of 
much good. This was especially the case in bringing the 
trust companies together to act as a unit through a com- 
mittee, of which Edward King, President of the Union 
Trust Co., was made chairman. This committee was organ- 
ized in the office of J. P. Morgan & Co., which, indeed, was 
the headquarters for all banking relief outside of the Clear- 
ing House. 

Unfortunately for Europe, our purchases there of so many 
millions of dollars' worth of gold, within three weeks, seri- 
ously unsettled the London, Paris, and Berlin stock ex- 
changes, and a continuous decline in stock and bond prices 
attended its export to this country. But, notwithstanding 
the relief we obtained from this great source, the banks here 
still continued under a heavy strain. An indication of this 
was found in the statement of the New York Clearing House, 
giving the totals for the week ending on Saturday, the 9th 
of November, the third week of the acute stage of the crisis. 

It showed that the deficit of the associated New York City 
banks, in their legal reserve, had increased $13,085,800 over 
that of the week before, making their total deficit $51,921,- 
625. But as the Clearing House statements are made up on 
averages for each week, and not on the actual condition of 
the banks at the end of the week, the gold imported was 
only credited from the dates on which it was received by 
the banks. Moreover, this statement was made on rising 
averages, that of the week before on falling averages. 

A conspicuously important feature of the arrangements 



796 THE GREAT CRISIS OF I907. 

made at the Morgan conferences for supplying the needs and 
taking care of the Trust Company of America was the sale, 
at par — $100 a share — of the majority of the stock of the 
Tennessee Coal, Iron and R.R. Co. — which had been largely 
hypothecated with it — to the United States Steel Corporation, 
payment for the stock to be made in its 5 per cent sinking 
fund bonds at 84. This exchange of Tennessee stock for the 
Steel bonds was promptly made through J. P. Morgan & Co., 
on and after November 7, thus adding another large property- 
to the many other subsidiary properties of the U. S. Steel 
Corporation. 

This transfer was one of the most notable events of the 
memorable panic year — 1907 — the wreckage of which it will 
take a long time to clear away. But meanwhile the country 
will have started on a new career of prosperity, and with 
eighty-four millions of people to develop its boundless re- 
sources, we need have no fear but that its recovery will be 
rapid, and its future as gre-at and grand as we could desire. 
Moreover, it will be all the better and stronger, and all the 
higher in its business standards, for the severe yet purifying 
ordeal through which it has passed. 



CHAPTEE LXXII. 
THE CAUSES OF THE CRISIS OF 1907.* 

THE wiseacres in Wall Street and elsewhere had to take 
many sledgehammer blows in this panic year. They 
had become like Tom Toddy— too big-headed for their bodies. 
When a man knows it all, then his danger commences. My 
advice is, never follow such a leader, but wait patiently and 
the time will come when you can safely copper him. 

In September, 1906, when stock and bond prices were 
advanced abnormally to a 3J to 4 per cent basis, while six 
months' money was loaning at 6 per cent, it was evident that 
one or the other was too high; and considering the growing 
demand for the use of money it was quite apparent it was 
not money that was too dear, but securities. At that time 
I persistently advised everyone to get out of stocks and out 
of debt, and keep out for a prolonged period, only making 
quick turns meanwhile. 

Since then security values have gone down prodigiously 
— $3,500,000,000 will scarcely cover the depreciation of those 
dealt in on the New York Stock Exchange alone; so those 
who took my advice and got out at top prices can well afford 
now to buy back their stocks, if dividends are not reduced. 
"No one can foresee changes in these. But everything that is 
good is fairly cheap and below intrinsic value, based upon 
present returns. Our financial situation is vastly different 
to any previous one after great panics, of which there have 
been many, since the one of 1857 brought on by the failure 
of the Ohio Life & Trust Co., at the time of my advent in 
Wall Street : so I have been in all these panics. 

*An address by Henry Clews, LL.D., delivered at Cooper Institute, 
New York City, February, 1908. 



798 THE CAUSES OF THE CRISIS OF I907. 

The conditions now differ from those of all the other great 
financial storms because the wealth of the nation has become 
so vast as to make it the richest in actual wealth and pro- 
ductiveness, per capita, of all nations. As a matter of fact, 
our wealth-making developments have been so excessive as to 
have forged ahead of our banking facilities. This has had 
much to do with our recent setback. Wise and sagacious 
capitalists saw the handwriting on the wall in Wall Street 
and elsewhere, and those who did unloaded their securities 
last year, dumping their stocks at top-notch prices, amount- 
ing to at least $800,000,000, upon weaker-backed people. 

This unloading, together with the San Francisco earth- 
quake disaster, wiped out, in prices, $350,000,000 of prop- 
erty, and struck the staggering blows which did more than 
anything else to pave the way to the recent panic conditions. 
The selling out by big holders was followed by all the large 
railroad systems in the country selling bonds, stocks and 
notes. These, being offered to stockholders of record at 
apparently tempting prices, were floated. This great mass 
of new securities coming on the market was an indigestible 
one and absorbed the capital of a very large number of the 
rich men of the country and put it in a fixed form: and 
most of these heretofore very rich men have ever since been 
in the position of a man who, having had a " Sherry dinner," 
is urged to accept the hospitality of a friend to take a 
" Delmonico dinner." 

What produced the panic was a number of adverse factors 
happening one after another in rapid succession. The first 
was the unloading by sagacious holders of securities at high 
prices; the second was the immense creation and selling of 
new securities by the railroads for improvements ; the third, 
the revelation of scandals started by Mr. Hughes, the in- 
vestigator of the life insurance companies. We all know 
what happened in that connection. Then came the Inter- 
state Commerce examination of Mr. Harriman as a witness 
and his revelations under oath; then the $29,400,000 fine 
by Judge Landis on the Standard Oil Co. of Indiana, and 



THE CAUSES OF THE CRISIS OF I907. 799 

finally, the insistence by Governor Hughes, against over- 
whelming opposition, of the passage of the Utilities Bill, 
under which the investigation of the Metropolitan Surface 
Railroad was started and which unearthed what really caused 
the shares of that great company to fall from their high 
price of $127 per share to $20 a share — about the present 
price. This was the straw that broke the camel's back and 
caused an entire breakdown of confidence ; which is usually 
the major part of the foundation of credit. The under- 
mining of this caused the closing of the doors of the Knicker- 
bocker Trust Co. Then a state of chaos ensued and bedlam 
broke loose, and almost everybody in Wall Street stood aghast 
wondering what would happen next. 

As I have faithfully presented my side of the case to 
you, in a crude way, I ask you, as though you were impan- 
eled on a jury, the question: Why should all the blame of 
producing the recent panic be laid to President Roosevelt? 
The real causes of all the trouble can be summed up as 
follows: (1) The high finance manipulation in advancing 
stocks to a 3 J to 4 per cent basis, while money was loaning 
at 6 per cent and above, on six and twelve months' time on 
the best of collaterals; (2) capital all over the nation having 
gone largely into real estate and other fixed forms, thereby 
losing its liquid quality; (3) the making of injudicious 
loans by the Knickerbocker Trust Co., hence suspension; 
(4) the unloading by certain big operators of $800,000,000 
of securities, following which were the immense sales of new 
securities by the railroads; (5) the California earthquake, 
with losses amounting to $350,000,000 ; (6) the investigation 
of the life insurance companies; (7) the itetropolitan Street 
Eailroad investigation; (8) the absurd fine by Judge Landis 
of $29,400,000 against a corporation with a capital of 
$1,000,000; (9) the Interstate Commerce Commission's 
examination into the Chicago & Alton deal and the results 
thereof. 

These were substantially the causes which led up to and 
really brought about our present disastrous condition. Did 



800 THE CAUSES OF THE CRISIS OF I907. 

President Koosevelt do any of these things? Not one of 
them. But Governor Hughes was the brilliant investigator 
of the life insurance companies, and also unearthed the 
Metropolitan Railroad scandal through being the author of 
the Public Utilities law. Yet Mr. Roosevelt is condemned 
by many, while Mr. Hughes is praised by the people all 
over the country. I ask on this showing if there is any 
justice in putting the entire blame for the present disturbed 
state of financial affairs upon President Roosevelt's shoul- 
ders, without including Governor Hughes, as both have been 
equally engaged in the same reform movement. 

I am not willing to affirm that either is to blame, for both 
have simply done their duty in enforcing the laws, and ex- 
posing wrongdoing. Now in my opinion the market will 
turn permanently when the big men of Wall Street com- 
mence to take back what they sold, which they can already 
do at a difference in prices of from 30 to 50 per cent. With 
the $70,000,000 of imported gold here and on the way from 
Europe, together with an increase in bank notes, there will 
soon be no lack of money in this country. What is now 
wanted is more confidence to increase credits. To import 
more gold will embarrass London and other foreign money 
centers. This should be avoided by stopping further gold 
imports. Cheap money alone will not of course put up 
stocks. The governing factors will be the state of trade, 
and net earnings, and the " big men " will be governed 
by these. 



CHAPTEE LXXIII. 
RECENT MEN OF MARK. 

Charles M. Schwab. 

BORN in Pennsylvania, May 30, 1851; rose, from the 
bottom, to be President of the Carnegie Steel Com- 
pany, then, on its incorporation, became President of the 
United States Steel Corporation, but resigned, and later 
became President of the Bethlehem Steel Company; has 
large mining interests, especially in Nevada ; he travels much, 
but resides on Riverside Drive, New York, in one of the 
largest houses in the city, built as an exact copy of a his- 
torical French chateau near Paris. 



Daniel Gray Reid. 

Born in Richmond, Ind., August 1, 1858 ; became Vice- 
President of Second National Bank there; then went into 
the tin plate industry, and in 1895 became one of the organ- 
izers of the American Tin Plate Company, afterwards 
merged in the United States Steel Corporation ; removed to 
Chicago in 1897, and to New York in 1899, and was one of 
the Executive Committee of the United States Steel Corpora- 
tion when organized in 1901 ; also became a director and 
leading spirit in the Rock Island Railway Company in asso- 
ciation with the two Moore brothers, William H. and James 
Hobart, the Chicago reorganization lawyers. All three are 
now residents of New York. 



802 RECENT MEN OF MARK. 



Thomas Fortune Ryan. 



Born in Virginia, October 17, 1851 ; came to Wall Street 
in 1870 from Baltimore and the drygoods trade; became 
prominent in the consolidation and extension of metropolitan 
street railroads, and also gas and electric light systems here 
and in Chicago, and in the American Tobacco Company, and 
later bought control of the stock of the Equitable and the 
Washington Life Insurance companies; has been director of 
many other corporations, and is also Vice-President of the 
Morton Trust Company. 



John Warne Gates. 

Born at West Chicago, 111., 1855 ; kept a hardware store 
there ; then became salesman in Texas for barbed wire ; later 
established the Southern Wire Company in St. Louis and 
Braddock Wire Company near Pittsburg; after absorbing 
two other companies, sold out to Federal Steel Company, 
which was then absorbed by United States Steel Corporation. 
He thus acquired great wealth, and became a large operator 
in Wall Street, and organized the firm of C. G. Gates & Co., 
now dissolved. After buying control in the open market of 
the Louisville & Nashville Railway, he sold it to J. P. Mor- 
gan & Co. 

August Belmont. 

Born February 18, 1853 ; son of the late August Belmont, 
and head of August Belmont & Co., bankers, and New York 
representatives of the Rothschilds ; is President of the Inter- 
borough Rapid Transit Company and other corporations; 
also of the Coney Island Jockey Club and other turf organi- 
zations, and keeps up a large racing stable, is also a director 
in a number of banks and railways and other companies, and 



RECENT MEN OF MARK. 803 

politically, like his father, a leading Democrat; is a member 
of many clubs and associations; graduated at Harvard in 
1875, and has a New York residence at 44 East 34th Street, 
but lives much of the year at his country home at Hemp- 
stead, Long Island. He is well known, too, as the financial 
director of the Belmont Tunnel, across the East River, be- 
tween New York and Long Island City. 



William H. Moore. 

Born in Utica, N. Y., October 25, 1848; located in Chi- 
cago with his younger brother, James Hobart Moore, in 1873, 
and both were admitted to the Illinois bar, and practiced 
as W. H. & J. H. Moore, making a specialty of reorganizing 
corporations ; reorganized the Carnegie Steel Company, and 
formed the four corporations in " the Moore group " that 
were absorbed by the United States Steel Corporation ; later 
controlled the Rock Island and other railway and industrial 
corporations, partly in conjunction with Daniel Gray Reid. 



Anthony Nicholas Brady. 

Born at Lille, France, August 22, 1843 ; came to the 
United States with his parents when a child; opened a tea 
store in Albany in 1864, and afterwards other tea stores 
there and in Troy; became a promoter and director of gas 
and electric light corporations in Albany, Troy, Chicago, 
New York, and other cities, and, later, of street railway com- 
panies in Brooklyn and elsewhere ; acquired a controlling 
interest in the People's Gas Company of Chicago and a very 
large one in the Brooklyn Rapid Transit Company, into 
which he merged his Brooklyn companies; is also a large 
stockholder in the American Tobacco Company and many 
other industrial companies; resides at 411 State Street, 
Albany, but his office is at 54 Wall Street. 






804 recent men of mark. 

Stuyvesant Fish. 

Son of the late Hon. Hamilton Fish, Governor of the 
State of New York and Secretary of State in General 
Grant's Cabinet. Born June 24, 1851, at New York, N. Y. 
Educated at Columbia College, New York, graduated 1871. 
Entered railway service October 1, 1871, after which he, 
up to June 20, 1872, became clerk in the Illinois Central 
Eailroad, New York office; June 20 to October, 1872, sec- 
retary to president of same company; November 1, 1872 
to December 31, 1874, clerk with Morton, Bliss & Co. at 
New York, and Morton, Rose & Co. at London; January 

1, 1875 to March 15, 1877, managing clerk Morton, Bliss & 
Co., holding their power of attorney; December 14, 1876 to 
March 6, 1879, member New York Stock Exchange; March 
16, 1876, elected Director Illinois Central Railroad, and ap- 
pointed treasurer and agent for purchasing committee New 
Orleans, Jackson & Great Northern Railroad; November 8, 
1877, elected secretary Chicago, St. Louis & New Orleans 
Railroad; and March, 1882, vice-president Chicago, St. 
Louis & New Orleans Railroad; January 7, 1883 to April 2, 
1884, second vice-president Illinois Central Railroad; April 

2, 1884 to May 14, 1887, vice-president; May 18, 1887 to 
November 7, 1906, president same road; President Ameri- 
can Railway Association April 27, 1904 to April 25, 1906; 
Chairman Seventh Session International Railway Congress, 
Washington, D. C, May, 1905. Elected Director of the Na- 
tional Park Bank, March, 1883, and so remains; elected a 
Trustee of the Mutual Life Insurance Company of New York 
in the year 1888 and continued as such until February 23, 
1906, when he resigned. What Mr. Fish did for the Illi- 
nois Central Railroad Company while its President, is shown 
in the following extract from the London Statist, and also 
in the Annual Reports of the Directors of the Company, 
which make a marvellous exhibit of Mr. Fish's able and 
sagacious management during his long regime: 



RECENT MEN OF MARK. 805 

The Illinois Central is the most important of the systems 
running north and south between Chicago and the Gulf of 
Mexico. At one time its prosperity chiefly depended upon the 
cotton crop; but although this crop still gives it a large 
traffic, its prosperity has been built up by the acquisition 
of a large share of the grain and maize traffic. In the old 
days corn, or maize, was sent through the Western States 
for shipment via Boston, New York, and Baltimore, but the 
Illinois Central has now succeeded in diverting a vast por- 
tion of it to New Orleans. It now derives its revenue from 
carrying a large traffic at low rates in competition both with 
the Eastern lines and with the water transit of the Mississippi. 
In recent years the Company has built extensions which now 
enable it to participate in the coal and iron ore traffic re- 
quired by or originating in the Birmingham iron district. 
The Illinois Central has always enjoyed good management. 
In its early days, when the accepted principle of railway 
working was to charge high rates and to carry very little 
traffic, its policy conformed to that of other well-managed 
undertakings. For the past twenty years its policy has 
changed; it has sought to render to the public the maximum 
of service for the lowest possible rate. The success of this 
policy has exceeded all expectations. In the twelve months 
to June 30th last the Company carried traffic at a lower rate 
than ever before, and yet obtained a record profit, both actu- 
ally and relatively to its capital expenditure. This success 
has resulted from good management, economy of operation, 
and economy of capital expenditure. 



GOVERNOR HUGHES AND WALL STREET. 

In respect to the present agitation at Albany, as recom- 
mended by Governor Hughes, to investigate Wall Street 
methods, I do not hesitate to say that as the head of the 
firm of Henry Clews & Co. I am perfectly willing at any 
time to allow a representative, appointed by either the Fed- 
eral or State authorities, to examine the books of my firm, 
as the result of such an examination can reflect nothing but 
credit on our business methods. I should, however, object 
and refuse to show, in any instance, the names of our cus- 
tomers, as our relations with them are confidential and will 
not be betrayed. Ever since our firm was established we 
have made a practice of issuing notices of purchases or sales 
to clients, giving in each case the name of the broker from 
whom bought, or to whom sold. This is now, I believe, the 
custom in other offices, and is a guarantee that brokers exe- 
cute the orders on the floor of the New York Stock Exchange. 



CHAPTER LXXIV. 
NEEDED PUBLICITY AND REFORM IN CORPORATIONS. 

YEARS ago I saw the inevitable end of the methods of 
some of the unscrupulous managers and manipulators 
of corporations, and began to agitate the employment of cer- 
tified public accountants to examine into, and report to the 
stockholders, the true condition of the companies involved. 
Had my suggestions been adopted there would have been 
little cause for the recent investigation by the government 
officials, as the reform now sought would have been accom- 
plished long before the present stringency of money became 
a disturbing element all over the world, and would not have 
led to the semi-panicky conditions which prevailed so dis- 
astrously in 1907. An address on " Publicity and Reform," 
which I delivered before the Wharton School of Finance, 
University of Pennsylvania, in April, 1906, includes my 
urgent adoption of the policy I have referred to, and reads 
as follows: 

We live in a progressive age, and we are at present pass- 
ing through a period of salutary business reform. This 
reform means improvement, and business men of all kinds 
should help and not retard it. The banking, railway, and 
insurance communities should, in particular, do all they 
can to promote it and invite the fullest publicity as to their 
transactions and methods of doing business. In this connec- 
tion the opposition developed in the New York Legislature 
to the investigation of the banks was a mistake of judgment, 



808 NEEDED PUBLICITY AND REFORM IN CORPORATIONS. 

because it was calculated to excite distrust, whereas willing- 
ness to submit to thorough investigation would allay it. 

This opposition drew more public attention to the agita- 
tion for a general bank department examination than would 
otherwise have been attracted to it, and the unwillingness to 
submit to it suggested that there was a screw loose, or some- 
thing to conceal in connection with some of the State banks ; 
and that they were therefore vulnerable to attack, or at least 
open to criticism. This suspicion those concerned should 
have avoided by not only boldly facing the legislative music, 
but inviting it and leaving everything open and above board. 
Corporations and banking and mercantile firms that become 
at all objects of suspicion should, in their own interests, 
speedily clear themselves by inviting the fullest examination 
and publicity. Unsoundness and irregularity, if such ex- 
isted, would thus be exposed and weeded out, instead of being 
nursed in secret, and so doing harm and impairing confidence 
in corporations and firms perfectly sound and regular in their 
methods and practices. The sound concerns would stand bet- 
ter than ever after passing through this ordeal of publicity. 
The ISTew York Legislature, as well as the Legislatures of the 
other States, should respond to the popular agitation for pub- 
licity by passing laws requiring all corporations, including 
banks and trust companies, to make at least semi-annual re- 
ports of their condition, certified to by registered public ac- 
countants, with power invested in the State Superintendents 
to order special examinations by such accountants, at any 
time, when deemed necessary; that is, whenever they were 
suspected of being unsound or irregular in their business 
methods. This should be done for the protection of others 
as well as to clear them of suspicion and restore their credit, 
if found to be sound and straight. Only the insolvent and 
the crooked would have anything to fear from this wholesome 
publicity. 

In this way disaster might be averted and impaired confi- 
dence promptly restored. I lay stress upon the employment 
of skilled accountants because the certified results of their 



PUBLICITY NECESSARY TO CONFIDENCE. 809 

examinations would be accepted as conclusive of the actual 
conditions being as they stated or described. They would 
speak with authority. It should be made a felony for an 
accountant to make a false or misleading report, and he should 
ever after be disqualified from practising. 

To meet the growing demand for them, every college and 
university should have a department for the special training 
of accountants, who on graduating should receive a diploma 
or degree, as in the medical or legal profession. Already the 
position held by certified accountants is high, but it should 
be raised still more by the action of the universities and 
colleges. Some of these have established departments for 
accountants, where the students undergo thorough training 
by men who have had practical experience in the profession, 
but all institutions of learning ought to have them and main- 
tain them in a high state of efficiency in view of their im- 
portance to the business community. The opposition to pub- 
licity shown by the New York State banking interest, as 
represented in the Legislature, where it has choked off 
probing, has thereby aroused fresh suspicions and much 
adverse criticism. It is not surprising that many are led to 
suspect that there is much concealed that ought to be revealed. 

The strong desire for secrecy in the management of cor- 
porations, especially with life insurance companies, is obvi- 
ously in defiance of public sentiment, and the Legislature 
should now make the house-cleaning thorough while it is 
about it. If it does less it will fail in its duty. 

It is indeed very surprising, under the circumstances, that 
the officers and trustees of the great life insurance companies 
should have supposed that anything short of complete cleans- 
ing and purification would satisfy their policyholders and 
the public. 

The bankers of the country are, more or less, intimately 
concerned in seeing this Augean insurance stable thoroughly 
cleaned out, for, unless it is, distrust will linger, and the life 
insurance taint will, more or less, continue to extend to the 
banks, bankers, bond dealers, and trust companies, with which 



810 NEEDED PUBLICITY AND REFORM IN CORPORATIONS. 

the life insurance companies necessarily have to do busi- 
ness. 

For the banking interests to virtually ignore the past, and 
say to the life insurance companies, " Go, and sin no more/' 
would be pusillanimously evading the requirements of the sit- 
uation. The cloud that drifted over Wall Street from the 
insurance investigation must be entirely dispersed by the full- 
est investigation and publicity and the establishment of a new 
regime in insurance management and its banking methods 
and affiliations. 

It is the duty of life insurance trustees to co-operate to this 
end, and for them to refuse to do so is to imply consciousness 
of their own inability to stand the searching ordeal. If such 
there be, owing to their purchases or sales of securities, in 
connection with their respective companies, or any other 
doings that cannot bear the light or are open to criticism, 
they should be ventilated and exposed without fear or favor. 

The efforts to smother further life insurance investigation, 
which had their counterpart in the opposition to the proposed 
banking department investigation, should be frowned down 
by public opinion, both in the interests of morality and good 
business practices. The banks and the banker should, like 
Caesar's wife, be above suspicion, and not less so the life in- 
surance manager and trustee. 

Turning to the railways, we find the need of stricter laws 
in matters that favor a few at the expense of the many, as, 
for instance, in the giving of rebates. To prevent these, not 
a mere fine, which can be easily paid, should be imposed, but 
the offence should be made a misdemeanor, punishable with 
imprisonment. Railway officials would then, with the danger 
of an indictment and a term in prison before them, hesitate 
to violate the law. For their own reputation, as well as for 
the sake of their families, they would be likely to avoid that 
secret and unlawful rate-cutting, disguised by the payment of 
rebates, which has done so much in the past to foster unholy 
monopolies and crush competition to the ruin of thousands. 

In the lime-light of publicity the irregular rebate practices 



PUBLICITY A WHOLESOME REMEDY. 811 

of the railways, for the benefit of large and favored shippers, 
would be impossible ; and equally so would have been the go- 
as-you-please and extravagant management of the life insur- 
ance companies as revealed by the insurance investigation. 
Under the new order of things, regulated by stricter laws, it 
should be made impossible for these irregularities ever to 
occur. The death-knell should also be sounded by these 
stricter laws and reforms of much of the " graft " that has 
been epidemic in political and business life. Publicity of 
accounts would be a protection to all solvent concerns and ex- 
pose and eliminate the unsound and the fraudulent that would 
otherwise be a menace to them, and it should be welcomed by 
all who have nothing to fear from such publicity. 

We are passing through a reform — yea, a revolutionary 
period in business affairs. But good will come out of it, for 
with our improved business methods will come a higher sense 
of responsibility and a keener perception of duty, which can- 
not fail to inspire correspondingly greater confidence and 
produce more certain results. We shall thus have more 
conservatism in business and fewer speculative hazards and 
crookedness than before. 

Therefore, let the march of reform be unimpeded, for it 
will lead us to a higher financial and commercial eminence 
than even that on which we already stand, and hasten the time 
when this country will be the world's greatest financial and 
commercial centre. 

It would seem that many need more conservatism and pru- 
dence in their business ventures, and they would be the better 
for having the lime-light of publicity thrown on them. When 
the sky-rockets of the business world fall they are not the only 
sufferers, for they injure others who are perfectly sound and 
conservative by creating distrust of all. 

The accounting and publicity I advocate would expose, 
check, and prevent the irregularities and the one-man power 
abuses that have ended in so many collapses. The one-man 
control of large corporations must come to an end. An ounce 
of prevention is better than a pound of cure. 



812 NEEDED PUBLICITY AND REFORM IN CORPORATIONS. 

Corporations, too, should show that they have souls by not 
neglecting the welfare of their employes. They should pro- 
mote their health by giving them healthy surroundings where 
they work, and also by making graduated provision for old 
age service, or pensions in case of disability, after long serv- 
ice. This, or giving them a share in the profits of the busi- 
ness, would do much to narrow the gulf between labor and 
capital. 

The one-man power in large corporations, with a lot of 
dummy directors subservient to it, should also come to an end. 
Dummy directors are no better than so many decoy ducks that 
mislead the public. They are directors who do not direct, 
and are not expected to direct by those in control who selected 
them for election. They are consequently a false pretence. 
No man ought to accept a place as director or trustee of an 
institution, or corporation, particularly in a banking, rail- 
way, industrial or life insurance company, who does not fully 
appreciate the responsibility of the position and the care 
and vigilance it demands, and intend to faithfully and con- 
scientiously perform its duties. To intentionally become a 
dummy director is reprehensible, and directors in dealing 
with the officers of their corporations should have opinions of 
their own and not be afraid to express them. They are not 
alone responsible for their own errors or wrongful acts, but 
for failure to expose and put a stop to the wrong-doing of the 
officers or employes under their control, and they should not 
assume such duties when they cannot properly attend to them. 

I once knew a man of very great business renown, who dur- 
ing the last thirty years of his life was much sought after 
because he possessed the qualifications necessary to make him 
a most satisfactory dummy or dumb director. Hence he was 
connected with a very large number of companies. He was 
a man of wealth, retired from business, and had great ca- 
pacity, but it was of the avoirdupois kind. His chief qualifi- 
cation consisted in his always attending punctually all the 
meetings. He came early and stayed till the end. He 
watched closely to determine which way the majority vote was 



THE DUTY OF DIRECTORS. 813 

going and always went with it. He was never known to open 
his mouth, except when the luncheon was served after the 
directors' meeting had adjourned. He was much lamented by 
corporation managers when he died. He was their favorite 
director, on the ground, as claimed, he gave no trouble and 
was perfectly satisfied with the result of every meeting. When 
he was handed his five-dollar gold piece for attendance it 
caused him to go home rejoicing. I cite him as a specimen 
brick among dumb and dummy directors. 

Directors should make it their business to learn all that is 
going on in the corporations and institutions that they direct^ 
so that they may qualify themselves to act intelligently, in- 
stead of in a blindfolded way, as is too commonly the case. 
They should assert their rights, and direct in fact as well as 
in name, but of course necessarily leaving all the details to 
the officers. They, too, should avoid grinding axes of their 
own at the expense of their companies, and co-operate with 
both State and Federal officials in the strict observance and 
enforcement of the laws, and never connive or wink' at their 
evasion. 

All these influences for the better would promote public 
confidence in our ways of doing business, and indirectly also 
contribute to the stability of our monetary position. What 
we greatly need is a more stable money market in Wall 
Street. Such erratic changes in the rates for Stock Exchange 
loans that we sometimes see would create a convulsion in Eu- 
rope if they were possible there. But as they are not possible 
there, why should they be here ? We are destined to ulti- 
mately become the monetary centre of the world, but that can- 
not be till we acquire the stability of the Old World in inter- 
est rates. 

A freak money market, jumping up to absurdly high rates 
and then down again, is as dangerous as it is intolerable. It 
ist inimical to the proper transaction of legitimate business, 
and a disturbing factor that should be made as impossible in 
New York as it is in London, Paris, or Berlin. What we 
need, among other things, to prevent it is more care and con- 



814 NEEDED PUBLICITY AND REFORM IN CORPORATIONS. 

servatism in banking circles. In the European money centres 
the rates for money rise and fall in response to supply and 
demand, just as they do here, but within narrow limits be- 
yond which they never pass. There is no good reason why it 
should not be so with us. 

It is to be hoped that the eminently well qualified members 
of the committee appointed by the New York Chamber of 
Commerce — consisting of Messrs. Vanderlip, Conant, Straus, 
Claflin, and Clarke — will reach a solution of the problem of 
the money market and define how far its vagaries and irregu- 
larities are owing to a want of sufficient currency, capital, or 
credit, or sudden and excessive demands for loans, consequent 
on excessive activity in speculation, or unwillingness to lend 
in times of distrust and panic. 

In European countries monetary stability can always be 
relied upon ; and that element of stability, which our money 
market now lacks, must exist here before we can command 
the confidence of the world as the world's financial centre. 
But we are now rapidly taking steps in the right direction, 
and the reform movement in business and legislation can 
come none too soon for our national welfare. Let the good 
work of reform go on and prosper, for from it we shall reap 
an abundant harvest in the future. 

There was no good and sufficiently sound reason why 
money, on call, should have loaned in Wall Street at rates 
ranging from 100 to 125 per cent per annum — as it did in 
December last, when in other cities all over the country it 
loaned no higher than six per cent. These money spasms, 
while local in their actual effect, exert a disturbing and de- 
moralizing moral influence which is far-reaching. Such per- 
nicious activity in the money market is not natural. It is due 
to artificial causes and ill-regulated methods affecting our 
local supply and demand. 

For the rates of interest to be leaping wildly up and down, 
in the loan crowd of the Stock Exchange, and changing vio- 
lently every few moments, according to the shifting bids and 
offers of the excited borrowers and lenders, would seem to be 



THE STRINGENT MONEY MARKET. 815 

absurd and laughable enough for opera bouffe. But in the 
banking and Stock Exchange business it is a serious evil, in- 
volving large results. 

Such an abnormal money market is, of course, not very 
often seen, but it occurs often enough to make it important 
for us to study its causes and seek a remedy for such monetary 
excesses. It is indeed a topic so serious as to call for the grav- 
est consideration. Yet neither the stringency nor these min- 
ute to minute, or hour to hour, fluctuations were caused by 
any fluctuation going on in the volume of the currency or any 
except local influences. 

What we have to guard against and prevent is these occa- 
sional spasms. Against the slow general rise and fall of in- 
terest rates for money of from, say, 2 to 6 per cent per annum 
and vice versa, there is nothing to be said, for the movement 
is a legitimate one, a natural result of the varying supply 
and demand. We see it in the Old World, as well as the New 
World, but such rocket-like soarings, and such eccentric ups 
and downs as Wall Street has experienced from time to time, 
are peculiar to itself. It must, however, outgrow them, and 
the sooner it does so the better. It is not my purpose in this 
address to show how the end in view may be best accom- 
plished, but that it can and will be accomplished within no 
long time is certain. The fault is not so much due to the 
want of elasticity in our currency system as to our local 
methods of doing business in stocks and lending and borrow- 
ing money to carry them. 

The causes of general monetary stringency are always ap- 
parent, but the cause of the local scarcity of cash that sends 
the money rate up 5, 10, 20 or even 50 per cent in an hour 
or so among a small group of borrowers and lenders in the 
Stock Exchange, could evidently be avoided, as it is in Eu- 
rope, and it is the business and duty of both borrowers and 
lenders here to avoid it. 

One thing tending to produce occasional local stringency is 
that our money market has to contend with the evil effects of 
the New York Sub-Treasury, or rather the Sub-Treasury sys- 



816 NEEDED PUBLICITY AND REFORM IN CORPORATIONS. 

tern, that locks money up that ought to be kept in circulation. 
Every Sub-Treasury acts practically as a Government bank, 
just as the old United States National Bank in Philadelphia 
did, and takes in all the money it can get, but pays out none, 
except on Government vouchers. So it does not perform all 
the functions of a bank, and we should have a more elastic 
currency if the Sub-Treasury system were abolished, which it 
doubtless will be in time. Theoretically, we have no United 
States National Bank, yet practically we have one in every 
Sub-Treasury. Until Congress amends the Sub-Treasury and 
National Currency laws, the banks and trust companies could 
by a united understanding prevent extreme money rates, by 
agreeing not to charge in excess of 10 per cent interest ; or, 
what would be better still, 7 per cent, on call loans during 
periodical money strains. While they would lose some im- 
mediate profits, they would be abundantly compensated later 
on by making New York a greater, safer, and stronger finan- 
cial centre, which would materially increase their business. 

In Germany, emergency currency may be issued by the 
banks in times of stringency. This, in effect, releases them 
from the limit on reserves, just as, in panics, a Government 
order in council releases the Bank of England from the limit 
placed on its note issues, and allows it to issue its notes to an 
unlimited extent. The consequent inflation of the currency 
under both the German and English systems, and the revival 
of confidence produced by it, brings relief in the money 
market. 

But our only way of obtaining similar relief is for the Sec- 
retary of the Treasury to order Treasury deposits to be made 
in National banks on the security of United States bonds, or 
if he is willing to accept them, first class State or city bonds. 
Assuming the banks to have the bonds, the Treasury may not 
always have the money to spare for this purpose beyond its 
proper working balance, and at the best it is a make-shift 
expedient. 

That we need a more elastic currency is indisputable, and 
also such changes in our custom of borrowing and lending 



FREQUENT EXAMINATIONS OF CORPORATIONS. 817 

money on collaterals on the Stock Exchange as will secure 
stability in rates of interest there, even in times of stringency. 
The time will come when the circulation of the National 
banks will be based on gold, instead of United States bonds, 
and in that way our monetary system will more closely ap- 
proach that of the principal European nations. But we need 
not prepare to cross the bridge until we come to it. 

With regard to the other matters referred to, it is always 
well to strike while the iron is hot, and at present the reform 
movement in legislation affecting life insurance and banking 
concerns is at white heat, not only in the State of New York, 
but elsewhere, and it should be pressed forward until all the 
results aimed at are secured. 

In the first place, to accomplish this the life insurance and 
bank investigations already in progress, or proposed, should 
be carried out to the fullest extent, and, through the employ- 
ment of expert and independent bookkeepers and accountants, 
made so thorough as to leave nothing hidden or in doubt. 
The results in detail should then be promptly published, and 
in a form that all could understand, so that the public would 
know the plain, unvarnished truth. In this way rumors and 
suspicions of underhand doings, bribery and corruption, 
graft, fraud, deficiencies in accounts, misappropriation of 
funds, and concealed insolvency, would, if not confirmed, be 
contradicted and swept away, thus leaving the concerns be- 
fore under suspicion in all the better credit and standing. 

Not only should all this be done now, but the State Legis- 
lature should be equally prompt in passing the laws necessary 
to maintain this high standard of publicity in the future, 
and making it mandatory upon the banking and insurance 
departments to order frequent examinations into the condi- 
tion of all State banks and banking and insurance concerns 
by expert accountants, and publish their findings. All oppo- 
sition to such investigation and publicity is of itself calcu- 
lated to excite suspicion, whether it comes from banks, trust 
companies, life insurance officers, and trustees, or other con- 
cerns, or parties in interest. Industrial and other corpora- 



818 NEEDED PUBLICITY AND REFORM IN CORPORATIONS. 

tions of all kinds, including railways, ought also to be made, 
by mandatory laws, subject to stricter supervision and period- 
ical examination as to their financial condition. Hence the 
Attorney-General of this and other States should be invested 
with new powers to this end, and the provisions of the laws 
should be made mandatory upon them. They should call for 
verified statements of earnings, profits, expenses, capitaliza- 
tion, indebtedness, dividends, property valuations, liabilities 
and assets, so that large corporations would cease to be blind 
pools, and fraud and misrepresentation would be checked by 
being exposed ; and it is exposure and publicity which is most 
dreaded by those who prefer crooked ways to open and above 
board business methods and integrity of purpose. But those 
who have. nothing to hide have much to gain from it, and 
should welcome the lime-light of this new era of publicity. 
Secrecy is only the defence of the weak. 

The recent decision of the Supreme Court of the United 
States in the Tobacco and Paper Trust cases, that corpora- 
tions cannot take refuge in secrecy, but must give testimony 
as to all their transactions, when required, even where it is 
self -incriminating, is a great victory of the people. It marks 
the beginning of a new departure in corporate management 
by enforcing existing laws, and requiring that publicity of 
accounts, which large industrial, railway, and other corpora- 
tions, and most notably the large industrial trusts, have hith- 
erto so strictly guarded against and avoided, after the blind 
pool fashion. 

The decision is that the law as it stands, giving a witness 
the constitutional privilege of refusing to give testimony tend- 
ing to incriminate himself, does not extend to or cover his 
refusal to produce books and papers that would incriminate 
his, or any other corporation, the immunity being wholly per- 
sonal. He cannot, therefore, assert it either in behalf of a 
third person or a corporation, yet strange to say this clear 
and convincing reasoning has never been put forward by 
lawyers opposing the trusts. But it will make the way of the 
corporation transgressor harder in the future. 



TO CORRECT ABUSES AND BAD MANAGEMENT. 819 

It opens the door and clears the way for a thorough, com- 
plete, and public examination of the affairs and accounts of 
the trusts. It removes the first loophole for their escape from 
the consequences of their unlawful acts, and from the ex- 
posure of their methods of opposing and crushing competitors. 
They will, therefore, become liable to prosecution under the 
Sherman Anti-Trust Law, and all unlawful combinations, 
schemes, and conspiracies will be effectually and permanently 
broken up. 

This decision is of such vast and far-reaching importance, 
not only to all directly concerned, but to the whole country, 
that its legal effect and its moral influence can hardly be 
overestimated. It will probably become as famous in the his- 
tory of the Supreme Court as the Dred Scott decision ; and it 
will prevent in future the miscarriage of justice for want of 
evidence against corporations, which has so frequently oc- 
curred in the past. It will also raise the moral tone of cor- 
porate management by enforcing publicity before refused, for 
the decision not only applies to all railway and industrial 
corporations, but banks, trust companies, and insurance com- 
panies of all kinds. It shows that a rigid enforcement of ex- 
isting laws is alone necessary to correct many abuses of long 
standing. 

The temptation that secret acts and secretive general man- 
agement present to those disposed to wrongdoing and chi- 
canery, malfeasance, misappropriation, and graft can easily 
be imagined; and it can also be as easily inferred that such 
management is apt to give rise to suspicions and rumors det- 
rimental to the interest of the corporations concerned, and 
indirectly injurious to others. Honesty is not only the best 
policy, but a moral duty, and should be as much the watch- 
word of corporations as of individuals, and no man should 
betray his trust for either love or money, whether acting in 
or out of a corporate capacity. 

There is more permanent prosperity, as well as honor, to be 
secured by honest than dishonest means, and to quote the 
Bible, " What does it profit a man if he gain the whole world, 



820 NEEDED PUBLICITY AND REFORM IN CORPORATIONS. 

and lose his own soul ? " Yet unscrupulousness in high places 
of trust is often forced upon public attention. This should 
all be swept away as a debasing element in business life, for 
dishonesty, like the upas tree, casts a blighting influence wher- 
ever it is. 

The corruption of judges and juries and the bribing of 
legislators should be more abhorrent than larceny itself to 
every captain of industry and all corporate officials, who 
should have equal respect for the truth and their own honor. 
Great wrongdoers should be no more exempt from punishment 
than small offenders and mere millions should furnish no 
protection to them. 

Great fortunes accumulated by monopoly and oppression, 
and other dishonest means, are no credit to their possessors, 
but really a reproach, and the abuse of power by them is a 
great national evil. Every business man should take pride 
not only in his regard for honesty, truth, and fair dealing, 
but in his own personal honor, whether he is acting for a 
corporation or himself. We are now on the highroad to the 
correction of a multitude of abuses and the country is to be 
congratulated upon this salutary movement for improvement 
and reform in our business methods. Our great remedy is 
publicity, and the enforcement of the law. 

The immensity and grandeur of our national progress and 
achievements justify us in looking forward to a still greater 
and grander development in the future and still more splen- 
did triumphs of mind over matter than we have already ac- 
complished. I do not say with the spread-eagle Fourth of 
July orator : 

" No pent up Utica controls our powers, 
But the whole boundless continent is ours." 

Yet it cannot be ignored that no other nation has such a 
magnificent career of expansion, development, and progress 
before it as the United States, united as it is by telegraph and 
telephone and our vast network of railways, from the At- 




WILLIAM H. MOORE. 



PUBLIC SPIRIT AGAINST CORPORATE WRONGS. 821 

lantic to the Pacific, and Maine to Florida, in unbroken 
continuity. 

With the growth of our population, which even now ex- 
ceeds eighty millions, we shall grow more and more in na- 
tional importance and wealth, not only in material wealth but 
in the higher products of an advancing civilization, in the 
arts and sciences and literature, and all that embellishes and 
glorifies mankind. Therefore we should, as we go along, con- 
stantly endeavor to correct errors, shortcomings, and abuses, 
and prune away rotten and unsound timbers in our public 
and business life, and make the whole machinery of business 
and activities of all kinds — trade, banking, insurance, man- 
ufacturing, legislative, and the various professions and me- 
chanical industries, work as legitimately, honestly, smoothly, 
and harmoniously as possible. The way to do this can be 
best paved by promoting public spirit, and sweeping away 
the opportunities for business wrongdoing in secret, such as 
rebating, by wise laws properly enforced, and backed by pub- 
lic opinion, yet laws not oppressive, unjust or too inquisi- 
torial. This would compel the " crooks," " grafters," " re- 
baters " and " competition crushers " of the business world, 
who have schemed in darkness, and shunned the light, to come 
out into the open view, and this publicity alone would be a 
perfect cure for many great evils. So let us have more light — 
the light of publicity. 



CHAPTEK LXXV. 
iTHE MONETARY SITUATION AND ITS REMEDIES.* 

THE rapid growth of our population, the great activity of 
all our industries, the general prosperity of the country, 
apart from the terrible calamity at San Francisco, and the 
immense speculation going on in land and mining ventures, 
especially in the West, are the underlying causes of the severe 
monetary stringency that New York has lately experienced. 
These influences have kept money to a much larger extent 
than usual active in the interior and prevented its concen- 
tration not only in New York and the other Eastern monetary 
centres, but at the Western centres. 

Chicago in particular found that money, instead of return- 
ing there from the interior in good volume, as it usually does 
in January, February, and March, continued this year to be 
sent to the interior by the banks there at an average rate of 
$12,000,000 a month during these three months. This move- 
ment was not so much owing to the land and mining boom as 
to the immense absorption of money in the various manu- 
facturing, mercantile, and other expanding business interests 
all over the West and South. So great was, and still is, the 
activity in these directions that speculation in grain, provi- 
sions, and stocks has been more neglected in the West than 
for several years, as the narrowness of the markets there has 
shown. 

To show more precisely the effect on the money markets of 
this unusually great speculative and industrial activity it is 

* An address to the We6t Virginia Banking Association at their 13th 
Anniversary Meeting, at Elkins, West Virginia, June 19, 1906, by Henry 

Clews. 



UNPRECEDENTED GROWTH OF BANKING. 823 

only necessary to say that, during this first quarter of the 
year 1906, the Chicago banks steadily and heavily lost in de- 
posits, while their loans kept increasing. A comparison of the 
condition of the national banks in that city on April 6th, as 
reported to the Comptroller of the Currency, with their con- 
dition at the date of their previous report on January 29th, 
showed an increase in their loans of $8,625,237 (or 4.11 per 
cent) and a decrease in their deposits of $6,773,490 (or 2.11 
per cent) and a decrease in cash resources of $14,628,960, or 
10.38 per cent. These figures explain why money was so 
scarce in New York. The West had none to send us, although 
there is more money in circulation than ever before. If we 
go back to the condition of the same Chicago banks on March 
14th, 1905, and compare it with their report referred to, we 
still find that their deposits decreased $8,687,117 and their 
cash resources $7j970,318, while their loans increased $1,- 
599,774; and in their reduced cash resources the Chicago 
banks reflected the condition of the banks in all the other 
large cities of the West, Northwest, and Southwest. There 
has been a rapidly rising volume of trade and land and min- 
ing speculation there for more than a year, and enormous 
activity in new industrial enterprises. In the Southwest, par- 
ticularly, the growth of banking has been not only unprec- 
edented but enormous. I include in this designation the 
States of Missouri, Arkansas, Louisiana, Texas, and Kansas 
and the Territories of Oklahoma, Indian, New Mexico, and 
Arizona. The last decade has witnessed in this section of our 
country more extensive and rapid material development than 
was ever before seen anywhere, either in the United States 
or elsewhere, and this expansion in banking was in response 
to that material development, and therefore had a legitimate 
foundation in business requirements. American spirit and 
enterprise, and Western push, overcame all obstacles in 
spreading civilization and creating trade, especially in the new 
settlements. 

In the Hve years ending with 1900, 101 new national and 
other banking institutions were established in these nine 



824 THE MONETARY SITUATION AND ITS REMEDIES. 

States and Territories — with a consequent increase of $94,- 
500,000 in individual deposits and $150,300,000 in aggre- 
gate resources, and in the next five years ending with 1905 
no fewer than 1,415 new banks and banking institutions were 
added to the number — a resulting increase of $73,400,000 in 
capital and surplus, $383,750,000 in individual deposits and 
$670,350,000 in aggregate resources. Thus, in ten years, 
there was an increase of 1,516 in the number of banks, of 
$137,000,000 in capital and surplus, of which $79,000,000 
was surplus, of $478,000,000 in individual deposits, and of 
$820,750,000 in aggregate resources. 

This enormous banking development reflected and stim- 
ulated the enormous development of the country, and aided 
trade fully as much as trade helped the banks. The one kept 
pace with the other, and marvelous progress in both was the 
result; and this progress continues, and will continue in- 
definitely long under the stimulus of the rapidly increasing 
population of that still sparsely settled section. 

This banking development is of incalculable benefit, both 
locally and generally, for its influence is far-reaching. The 
drain of money from the outlying districts, including New 
York, to move the crops, is reduced as banking facilities in 
the West and South increase. 

In the South, during the same period, there has also been 
very great commercial and banking development, with the 
banks and trade going hand in hand to help each other, as in 
the Southwest. The South was never before so active and 
prosperous; and, rapidly as it is progressing, it will go on 
prospering with unabated vigor and enterprise, for it has 
entered upon a new era of prosperity and immense develop- 
ment of its material resources awaits it. In manufacturing 
and mining, as well as agriculture, immense opportunities 
are open to it; and before long the natural increase of its 
population will be largely added to by the white immigration 
that it needs. So the South has a bright and magnificent 
future. 

This vast industrial and mercantile activity— this general 



GREAT SPECULATION IN REAL ESTATE. 825 

business enterprise, this land and mining speculation, or 
boom, has extended, in various degrees, all over the United 
States, and the influence it has had on the money market in 
large cities, and particularly in New York, was only a nat- 
ural and easily foreseen result. It has produced a correspond- 
ing activity in money, because of the greater demand for its 
use; and the real estate speculation, the vastest we have to 
deal with, is still increasing. 

The boom is almost entirely in land and mostly in vacant 
plots, or lots, suitable for building purposes; but there is 
also a very active speculation in improved property, and 
much speculative building. The amount of money practically 
locked up in this land speculation is much larger than is gen- 
erally supposed. 

Statistics of 29 of the largest cities of the United States 
show that in the month of May they issued permits for the 
construction of 13,712 new buildings, to cost $55,074,761, 
against only 12,036 in May, 1905, to cost $50,791,738, an 
increase of 8 per cent, and a similar increase was shown in 
each preceding month of 1906. The May increase was great- 
est in cities remote from the Atlantic Coast; in Portland, 
Oregon, it was 309 per cent; in Tacoma, 111 per cent; in 
Seattle, 30 per cent. But the San Francisco catastrophe was 
evidently the main cause of the large increase in Portland 
and Tacoma. Yet the increase in Omaha was 75 per cent, 
in St. Paul 49 per cent, in Duluth 110 per cent, in Louisville 
50 per cent, in New Orleans 47 per cent, and in Chicago 39 
per cent. These figures, dry as they may seem, are eloquent 
in their suggestiveness of the extent of the demand for money 
from this one source, the land and building boom. 

Gold and silver mining speculation, too, last year began 
to assume the dimensions of a boom in Nevada, and all the 
old metal and mineral mining camps, and many new ones 
in other States, are, like the Lake Michigan copper regions, 
scenes of active speculation in properties, as well as busy 
with mining, and hosts of speculators are their own bankers, 
carrying large amounts of currency in their pockets. 



826 THE MONETARY SITUATION AND ITS REMEDIES. 

The money that usually returns to the money centers is 
thus widely scattered and too busily employed to return. So 
we have to deal with a period of prosperity and industrial 
activity that is something more than normal. But — without 
referring to the heavy drain of cash for the relief of San 
Francisco, which was offset by gold imports — although money 
was scarce in New York, owing to this enormous activity and 
general prosperity that kept it moving from hand to hand, it 
was not scarce enough to justify the excessively high rates 
we often witness on the Stock Exchange. These were seri- 
ous and hurtful, and to guard against such vicissitudes in our 
money market every member of the Stock Exchange and 
every banker and bank officer should use his influence. 

How far the Chamber of Commerce Committee on the Re- 
form of the Currency will succeed in providing remedies for 
the monetary situation remains to be seen. But from the 
twenty-seven questions it has sent to bankers and others it is 
apparent that it contemplates no fundamental change in our 
currency system^ Inferentially, it will not interfere with 
United States legal tender notes, nor with United States 
bonds as a basis for the circulation of the national banks. 
Yet both bases are indefensible on sound economic principles. 
The issue of greenbacks was merely a war measure, and in- 
tended to serve only a temporary purpose ; instead of which 
we have made it permanent, so keeping the Government in 
the banking business with its war currency system. 

There can be no question as to the false bottom on which 
the national bank currency rests; for paper, that is, paper 
money, should not be secured by, or redeemed in paper, even 
when that paper is as indisputably good as United States 
bonds. All our paper money ought to be based on readily 
convertible assets and redeemable in gold. Bonds, even 
United States bonds, by which national bank notes are now 
secured, are only evidences of debt, and the time will come 
when these will be liquidated, and the sooner the better. 

The committee probably thinks that the existing order of 
things, notwithstanding its fundamental errors, is too deeply 



THE SUB-TREASURY SYSTEM CAUSES STRINGENCY. 827 

rooted and strongly fortified to be materially changed with- 
out danger of the remedy proving worse than the disease. It 
consequently favors more national bank currency on the pres- 
ent basis. Branch banks and rediscounting for small banks 
by large banks are also favored. The committee's questions 
indicate, however, that it favors the abolition of the Sub- 
Treasury system, and to that result it should resolutely bend 
its energies. At present the Sub-Treasuries are practically 
banks, like the old United States Bank at Philadelphia, with 
the important difference against them that all the money they 
take in remains locked up in their vaults till paid out on 
Treasury drafts. The evil effect on the money market, and 
particularly on Wall Street, of thus withholding money from 
circulation in periods of stringency has been too often felt. 
It was more than usually conspicuous and severe during the 
late tight money ordeal, owing to the Treasury receipts very 
largely exceeding its disbursements. This greatly aggravated 
the scarcity of money in Kew York, due to other causes, and 
resulted, in Wall Street, in the rates for call loans ranging 
at times, within the last six months, with rapid and eccentric 
fluctuations, from 15 to 30 per cent, and on one occasion 
touching 125 per cent. We have here a phenomenon entirely 
distinct from ordinary monetary conditions. 

These extremely high and highly fluctuating rates are, it 
is true, peculiar to the New York Stock Exchange, but they 
are none the less a great evil, and they acquire national and 
even international importance from the fact that New York 
is the financial center of the country and the New York Stock 
Exchange the barometer of financial values for the whole 
United States. 

However much our commanding position may in other re- 
spects fit New York to be the world's financial center, it can- 
not aspire to and secure that position of power so long as it 
is the scene of these violent fluctuations in the rates of inter- 
est for call loans on the Stock Exchange. Measures should 
therefore be taken not only to prevent them, but to make their 
recurrence impossible; and how this can be best and most 



828 THE MONETARY SITUATION AND ITS REMEDIES. 

efficiently accomplished is a matter for very serious con- 
sideration. 

That it can be accomplished is evident from the entire ab- 
sence of any such violent rate oscillations in the money mar- 
kets of Europe. There the rates of interest fluctuate slowly 
within a reasonably narrow range, generally between 3 and 
5 per cent, the extremes being 1 or 2 above, or below, these 
figures. Such unreasonable eruptions in the money market 
as we have sometimes seen in the loan crowd of the New 
York Stock Exchange were never seen, and would be impos- 
sible, in London, Paris, Berlin, or any other European cap- 
ital. Why, then, should they ever occur, or be possible here ? 

In response to questions propounded by the Chamber of 
Commerce Committee I would say that, as the Sub-Treasury 
system is a disturbing factor in the money market, provision 
should be made by Congress for the regular deposit in na- 
tional banks of surplus Government money above its regular 
working balance of fifty millions, the banks to pay interest 
at 2 per cent per annum thereon. 

Bank notes, in my opinion, are a form of bank obligation 
the same in principle as bank deposits, payable on demand, 
and these notes, as the most convenient form of credit, 
should be released as much as possible from restrictions not 
necessary to secure their safety, acceptability, and redemption 
in gold, or United States legal tender notes, for so long as 
the latter may be kept outstanding. 

In seeking increased flexibility for our currency I would 
not suggest anything that would impair the value of United 
States bonds as a basis of circulation ; but it deserves consid- 
eration whether new currency might not be issued by mod- 
erately increasing, above the par of the bonds but not above 
their average market value, the amount of notes to be se- 
cured by them. Then, too, why should not national banks be 
authorized to issue a fixed proportion of circulating notes 
upon their general resources, these to be secured by a guar- 
anty fund? To induce the retirement of these notes when 
not needed, owing to money being superabundant at low 



NATIONAL BANKS AND ASSET CURRENCY. 829 

rates, this asset circulation could be made liable to a gradu- 
ated tax. The proportion of notes to capital that should be 
allowed, and the amount of the tax, are matters upon which 
bankers differ, but I favor strict moderation in both. This 
asset currency, under moderate restrictions, for use under or- 
dinary conditions, would be far preferable to any emergency 
circulation, issued under a high tax, although Secretary 
Shaw recommended it in his report for 1905. 

As the taxes collected upon the circulation of national 
banks from 1864 to the end of June, 1905, amounted to $96,- 
220,997, and the failed banks, during that period, had out- 
standing only $17,295,748 of notes, and the dividends paid 
on their claims averaged 77.95 per cent, it follows, at the 
same ratable proportion of loss, that the deficiency on account 
of their notes would have been only $3,813,712, or 22.05 
per cent of their total circulation. So in the light of this 
experience I see no great risk in a guaranty fund, consist- 
ing of the taxes paid upon circulation, nor do I see why 
it would not be sufficient to redeem all the notes of failed 
banks. 

I would make the asset currency a first lien upon the assets 
of the issuing banks, and allow the banks to redeem their 
notes at appointed redemption places in the large cities. This 
would save the trouble and delay of sending them to Wash- 
ington, and by facilitating redemptions when money was 
easy, give more ebb and flow to the currency and tend to pre- 
vent excessive speculation in times when there is a glut of 
money. Under the Canadian banking system there are sev- 
eral central redemption cities for bank notes; but I would 
not, as is the case in Canada, limit the right to issue notes 
to banks of not less capital than $500,000. There is safety 
in numbers, in regard to banks as well as other matters. 
Then, too, it would be well to make all the Sub-Treasuries in 
the country useful as national bank note redemption points, 
because it would contribute to the elasticity of the currency 
in the same way that it does in Canada, and doubtless Con- 
gress would favor such a measure. 



830 THE MONETARY SITUATION AND ITS REMEDIES. 

The proposition to establish a new bank in Wall Street 
with $50,000,000, or even more, capital, or to increase the 
capital of an existing bank to that extent, to serve the pur- 
poses of Stock Exchange borrowers, and regulate rates of in- 
terest, after the manner of the Bank of England, is deserv- 
ing of no consideration whatever. It would merely excite 
and provoke the jealousy and opposition of other banking 
institutions, and create a sort of monopoly with special priv- 
ileges, without securing the end in view. A Bank of Banks 
is not what we want, nor do we want a revival of the old 
United States Bank. 

Such a bank as the Bank of England, or the Bank of 
France, could not be created here, either in a day or a gen- 
eration, for those time-honored institutions are the growth of 
ages. They are very much older than any of the other banks 
there ; and, under the control of their respective governments, 
they have grown up with their countries and become prac- 
tically, although not by ownership, government institutions. 
Hence their prestige and power, and the impossibility of 
other banks superseding them. 

It may, however, deserve consideration whether the New 
Fork Clearing House might not exert power in regulating 
rates of interest similar to that exercised by the Bank of 
England, providing the banks belonging to it would unite to 
give it that power ; and is there any reason why they should 
not ? Even without any formal or concentrated action in this 
direction, outside of the Clearing House Committee, it could 
appoint a committee to name every week, or oftener when 
necessary, as the Bank of England does, a minimum rate of 
interest on call loans and discounts. It could also fix a max- 
imum rate for each. This need not be compulsory ; but even 
only as a recommendation it would have a powerful moral 
effect, and the Wall Street banks, if they approved of the in- 
novation, would conform to it. The Clearing House could, 
indeed, after the formal approval of this regulation by its 
members, enforce its observance under penalties, if deemed 
necessary. In this alone, in my opinion, a practical remedy 



NATIONAL BANK NOTES AND RESERVES. 831 

would be found for the high rate evil on the Stock Ex- 
change. 

But, at the same time, greater elasticity could be given to 
our national bank currency if Congress would amend the law 
so as to permit of currency being issued against specified 
bank assets, subject to the approval of the Comptroller of the 
Currency. This is a feature of the banking system of other 
countries, which has always worked very well and to the sat- 
isfaction of all interests; and what our currency urgently 
needs is greater elasticity. 

Strictly speaking, according to economic principles, we 
cannot expect a perfect currency, with all the resiliency and 
elasticity possible in a currency, so long as bonds instead of 
gold are used as the basis of our bank circulation. Yet for 
security the bonds are, under present conditions, just as good 
as gold ; and there would be more elasticity in the bank cir- 
culation based upon them if the restrictions imposed upon 
their redemption by the Act of 1882, which are now unnec- 
essary, were removed. Indeed, the inability to promptly re- 
tire bank notes is one of the worst faults of our system, and 
Congress should repeal the restrictions without delay. If this 
obstacle in the way of resiliency were removed, and the un- 
limited retirement of bank notes permitted, we may rest as- 
sured that free expansion, when demanded, would quickly 
follow curtailment, and this ebb and flow of the currency 
would obviously be an elastic movement. 

As it is, there is a great waste of banking power in our 
treatment of national bank notes and reserves. We have 
$544,765,959 of national bank notes, and only $337,130,321 
of United States legal tender notes, and, setting gold aside, 
the redemption of the former in the latter is obviously absurd 
and inconsistent with sound finance and good banking. We 
see in the present system this $544,765,959 of banking cap- 
ital absorbed and represented by non-reserve currency. The 
capital is perfectly safe, but it is locked out of any other use, 
and rendered inefficient for any other purpose. This calls 
for a remedy. The percentage of reserves to loans in national 



832 THE MONETARY SITUATION AND ITS REMEDIES. 

banks has decreased from more than 20 per cent in 1898 to 
less than 15 per cent. Hence the bank reserves require to 
be increased. 

The law relating to the redemption of national bank notes 
in United States notes, or greenbacks, was passed when the 
greenbacks very largely exceeded the bank notes in amount, 
but the reversal of these conditions reminds us that the tail 
is now wagging the dog. This alone makes it clear that the 
law should be amended. 

But beyond all this we should open our money market 
more to the rest of the world by establishing a new factor, 
which would always afford prompt relief in times of strin- 
gency, by giving us cable transfers of gold, instead of gold 
shipments, and of itself prevent abnormally high rates. 
Through this medium we could, instantly, practically draw 
gold from Europe whenever wanted, and Europe could do the 
same from us, when needed there. I refer to the establish- 
ment of an International Gold Transfer System, or Clearing 
House, to supersede and dispense with what I may call the 
old-fashioned gold see-saw. Gold in circulation is doing good 
work, but gold see-sawing across the ocean is going to waste. 
The custom of shipping gold from one country to another, in 
response to the ups and downs of the market rates for for- 
eign exchange, not only reminds me of the forward-and-back 
movement in a quadrille, but suggests that, as the precious 
metal is rendered practically useless while in transit, it should 
not be used in a dance of that kind across the ocean. The 
subject may not seem to be very important, but it really is 
so, for " tall oaks from little acorns grow " ; and it is sur- 
prising that in the march of modern improvement this method 
of settling international balances has not been superseded 
by a shorter, quicker, and cheaper cut to transatlantic ad- 
justments. Bankers, in both hemispheres, are absurdly be- 
hind this progressive and electric age, in transporting gold 
from the ~New World to the Old, and vice versa, to adjust 
balances between them, whenever the rates of exchange show 
a profit in the transaction. That they could profitably dis- 



AN INTERNATIONAL GOLD CLEARING HOUSE. 833 

pense with it is obvious, as they could easily establish this 
transfer system, this international clearing house for gold, at 
very small expense. Thus the risk, and loss of time, involved 
in the old-fashioned method would be eliminated, while the 
new arrangement, being under their own control, would be- 
yond peradventure serve every necessary purpose of the ship- 
pers, combined with perfect safety. 

The disadvantage of shipping boxes or kegs of gold to and 
fro between America and Europe is apparent when we con- 
sider that it is a time-wasting see-saw performance, which 
involves the expense of packing, cartage, freightage, insur- 
ance, and loss of interest while in transit, and still greater 
loss due to abrasion consequent on sea transportation, to say 
nothing of bankers' commissions, and risk of partial or en- 
tire loss by robbery, accident, or marine disaster; ignoring, 
moreover, the restraints it imposes upon our foreign trade. 

All these disadvantages could be obviated and this handi- 
cap upon our commerce removed by a mutual-interest arrange- 
ment, between the leading banks in the United States and 
Europe, to deposit a sufficiently large amount of gold on each 
side of the Atlantic, and issue international clearing-house 
certificates and draw bills of exchange against the deposits. 
This gold could be counted as part of their reserve, if in their 
own vaults; or the Bank of England, in London, and the 
United States Sub-Treasury in Wall Street, could be used as 
the gold depositaries. We have a clearing house for bank 
checks in each of the large cities, and one also for the transac- 
tions of the New York Stock Exchange. London, too, has its 
bank clearing house. Why, then, should the clearing house 
system not be extended to international transfers of gold, so 
as to make them possible at any moment by cable-telegraph 
instead of the slow process of six-days transfers? In this 
way our international dealings would be quickened and ex- 
tended and our financial and commercial relations become 
more intimate. 

There is no good reason why we should unnecessarily treat 
gold as we do, when we can save time, money, and risk by 



834 THE MONETARY SITUATION AND ITS REMEDIES. 

keeping the metal where it is, and issuing certificates of de- 
posit against it, and the use and transfer of which would 
serve as well as gold shipments. 

The present custom becomes a ridiculous " chasse " across 
the Atlantic, when we see the same gold shipped to Europe, 
then shipped back to America within a few days after reach- 
ing its destination, without being unpacked, owing to sudden 
intervening changes in the rates of exchange, making it prof- 
itable for the former gold exporting country to import the 
metal. Such wasteful shilly-shally procedure would be likely 
to excite mirth in opera bouffe, but bankers who ship gold are 
very serious about it, and seem to be without enough percep- 
tion of the ludicrous to see anything funny in its coming and 
going, although they feel the shoe pinch in its costliness in 
both time and money. As the world's gold production in- 
creases the urgent need of this over-sea change will become 
more and more conspicuous, and its adoption will accord with 
the generally progressive spirit and methods of our tele- 
graphic and telephonic age. 

Had such an international gold clearing house existed the 
sagacious but unprecedented action of the Secretary of the 
Treasury, to relieve the money market by making deposits, 
as secured loans, in certain banks, to encourage and cover 
iheir prospective gold importations from Europe, the same 
to be returned on the arrival of the gold, would have been 
unnecessary. While this expedient has well served a tempo- 
rary purpose, it is not to be relied upon as a permanent 
source of relief during monetary stress, and it involves a 
stretch of authority under the law that is open to grave ob- 
jection. But, as it happened, the Secretary's action, which 
was taken just before the San Erancisco disaster occurred, 
proved particularly fortunate, and probably prevented a very 
serious aggravation of the stringency in the money market, 
owing to the heavy remittances to California. It was a piec© 
of good luck that seemed almost providential, and the end 
justified the means. But it should always be regarded as 
only a fortuitous circumstance and temporary expedient, not 



TREASURY RELIEF TO BANKS. 835 

as a permanent source of relief ; and it emphasizes our need 
of a new international gold transfer system. Moreover, the 
benefit Europe would derive from it would be equal to our 
own. 

The Secretary, under the circumstances, acted wisely in 
also increasing the Treasury deposits in the national banks, 
while the Government's receipts were largely in excess of its 
disbursements, so as to offset, as far as possible, this pre- 
ponderance of receipts, and lessen the drain of money into 
the Sub-Treasuries. But this method of relief is, too, only 
a temporary expedient, to remedy the evils of the Sub-Treas- 
ury system. While the Sub-Treasury system lasts Congress 
should authorize the Secretary to deposit customs, as well 
as internal revenue receipts, in the national bank depos- 
itaries, in time of stringency, when the Government's receipts 
exceed its disbursements, and it has more than a sufficient 
working balance. The Government should, as a compensa- 
tion to it, require the banks to pay interest at, say, two and 
one-half or three per cent per annum on such deposits, these 
not to exceed, in amount, 25 per cent of their paid-up and 
unimpaired capital, and to be returnable on demand, but 
without requiring these special deposits to be secured. They 
should, however, be made a first lien upon the assets of the 
banks. 

If the changes above suggested were made, I am sanguine 
that they would prove to be remedies for the evils and dis- 
advantages under which we now labor, and so increase the 
stability of our money market and improve and fortify the 
machinery of the whole monetary system, while giving more 
elasticity to the currency. 



CHAPTER LXXVI. 
• INDIVIDUALISM VERSUS SOCIALISM.* 

IN" order that I may present a clear understanding of my 
view of the subject, it is only fair, in the first place, to 
state that the system of Individualism which I shall en- 
deavor to uphold is worthy and commendable. I hold it to 
be superior in every sense to any of the various plans of 
Socialism offered by its advocates. By this I do not mean 
Individualism in the extreme sense of the term, for, as we 
all know, in no civilized country and under no form of 
government whatsoever does, or can, extreme Individualism 
exist. 

In the world of economics and politics Individualism has 
a distinct meaning, as a name given to the theory of govern- 
ment which favors the non-interference of the State in the 
affairs of individuals. It has also been well defined, as the 
private ownership of the means of production and distribu- 
tion, where competition is possible ; leaving to public owner- 
ship those means of production and distribution in which 
competition is practically impossible. 

It will, then, be at once apparent that, in the consideration 
of the forces helpful and necessary to society, the individ- 
ualist believes that competition which encourages merit and 
develops skill should remain paramount. And right here the 
issue is made, between Individualism and Socialism, the So- 

* An address delivered by Henry Clews on Sunday afternoon, May 12, 
1907, at the Columbia Theatre, Brooklyn, in debate with Professor Kirk- 
patrick, graduate of Albion College, Michigan, and former professor in the 
University of Chicago. 



INDIVIDUAL FREEDOM NECESSARY. 837 

cialist denying that competition is beneficial to society, but 
contending rather that it is a deleterious and harmful force. 

Upon this issue, so joined, I stand firmly in favor of the 
principle of competition, and that system of Individualism 
which guards, protects and encourages competition. It is 
that system of government under which we live to-day — a 
government of the people, by the people and for the people 
— the United States of America — a free system of govern- 
ment, in the best and broadest sense of the term. 

Under this free system of government, whereby individuals 
are free to get a living or to pursue wealth as each chooses, 
the usual result is competition. Obviously, then, competition 
really means industrial freedom. Thus, any one may choose 
his own trade or profession, or, if he does not like it, he 
may change. He is free to work hard or not ; he may make 
his own bargains and set his price upon his labor or his 
products. He is free to acquire property to any extent, or 
to part with it. By dint of greater effort or superior skill, 
or by intelligence, if he can make better wages, he is free 
to live better, just as his neighbor is free to follow his ex- 
ample and to learn to excel him in turn. If any one has a 
genius for making and managing money, he is free to exer- 
cise his genius, just as another is free to handle his tools. 

In this primary outline of the free system of Individual- 
ism, it is well also to consider the good side of freedom or 
Individualism. It is an axiom, well established, that the 
freer men are to choose their work and to use and enjoy its 
results, the more work they are willing to do. Their energy 
and enterprise are called out, their wits sharpened, their 
hopes stirred. If any one wins unusual success, others are 
encouraged to try better methods. If an individual enjoys 
his money, gained by energy and successful effort, his neigh- 
bors are urged to work the harder, that they and their chil- 
dren may have the same enjoyment 

Thus, every one accomplishes more in a condition of free- 
dom or Individualism, and the whole nation is richer, than 
if custom or a Socialistic community fettered and restricted 



838 INDIVIDUALISM VERSUS SOCIALISM. 

men, and compelled them to work according to rule. With 
matured individuals, this is on the same principle that chil- 
dren enjoy their sports better, when left to themselves, than 
if a parent or teacher were to meddle and make rules for 
them. 

I believe that it can be stated, as an established fact, that 
whenever men are, as individuals, free to work, to earn and 
to save and use their earnings as they deem fit, the capable, 
the industrious, the temperate and the intelligent everywhere 
tend to rise to prosperity. The skilful are always in demand 
and at good wages. And remember, that a day's wages never 
purchased so much in supplies as it does in the United States, 
where we use the individual or competitive system of work, 
because high as prices are, wages are still higher. 

As a further part of this summary of Individualism and 
competition, let us also add the moral side, for it is a con- 
siderable and important item. When men labor, earn or save 
with perfect freedom, they develop many moral qualities, 
such as patience, self-reliance, self-sacrifice, venturesomeness, 
integrity, generosity and respect for others' rights. 

If a Socialistic committee of the wisest men could manage 
and make rules for the rest, and provide for every one's ne- 
cessities, men would not acquire or exhibit these sterling 
qualities of manhood, as well as they would by being thrown 
upon their own resources. 

We know this, also, from the fact that the strongest char- 
acters have been worked out in brave and patient competition 
and conflict, often under difficult circumstances ; whereas the 
men who have never been thrown upon their own resources 
rarely amount to anything. 

After this preliminary description of the worth and salient 
influence of Individualism, under which our country has 
grown to be the greatest nation of the world, let us now turn 
to Socialism — a system which, if adopted, would call a halt 
to our progress, tear down our established institutions, and 
turn our great prosperity into ruin and decay. 

It is difficult to tell just what is meant by Socialism in 
the more modern sense of the term. 



WHAT IS SOCIALISM? 839 

It has appeared in the United States under five different 
and almost totally disconnected forms. It has appeared as 
a movement towards the establishment of Socialistic commu- 
nities or communisms; it has appeared as Eourierism, as 
German or International Socialism, as Nihilism and Chris- 
tian Socialism. 

Professor Mallock, the eminent English writer, in his lec- 
tures in New York, made a careful analysis of Socialism, 
and exposed its plausible sophistries, some of which, Social- 
ists boast, are grounded on our defined principles of political 
economy, which the learned writer asserts are rather incom- 
plete. It may be admitted that this is so, and that fuller 
and clearer distinctions could well be added to our text- books 
on the subject. But, joining the issue in a clean-cut way, 
between Individualism and Socialism, obviates all necessity 
at this time of further considering such distinctions, and 
clarifies our respective positions in this debate. 

It was noticeable that, during the delivery of these lectures, 
hints and remonstrances were freely thrown out that the 
structure that Dr. Mallock was attacking was not Socialism 
at all, in the modern acceptation of the term, but something 
else that had long ago been abandoned. 

Now, while I have no unfriendliness whatever with the 
honest Socialist (mistaken, deluded and sadly out of place 
in this grand Kepublic, as he may be), I do say, that this 
position is but too often the wily subterfuge, sought to be 
taken advantage of by the insincere agitator or pretended 
reformer, when he sees that he is beaten. His invariable 
answer to an irrefutable argument is : " Oh, that which you 
talked about is not modern Socialism ! " 

For the purpose of this discussion, however, we can agree 
that, as contradistinguished from Individualism, Socialism 
opposes and denounces competition as an injurious and un- 
necessary force in society, and advocates the collective owner- 
ship, through the State, of all the means of production and 
distribution. 

Socialists would, in other words, fence up the great field 



840 INDIVIDUALISM VERSUS SOCIALISM. 

of free opportunity, deaden all incentive or inspiration for 
great achievement, and not only curtail, but wholly remove, 
the right to compete and excel, and make it impossible to 
write " success " as the result of individual effort. 

Just think of that ! Why, the very thing that the Socialists 
attack, as untenable and wrong in government — individual 
competition — has done more than anything else to make us 
what we are as a nation to-day; has kept alive the pre- 
cious fires of liberty and freedom and has preserved the 
institutions of our country. Take away the spirit of In- 
dividualism from the people, and you at once eliminate the 
American Spirit — the love of freedom — of free industry — 
free and unfettered opportunity — you take away freedom 
itself! 

And right here, I take the position and shall ever contend, 
that the United States (of all countries in the world) is no 
place for Socialism. Let us never forget that it was founded 
by the wisdom and patriotism of the Fathers of the Revolu- 
tion, and that it is blessed with a Constitution, framed by 
men who loved individual freedom and national liberty, and 
who risked their lives and sacrificed their property in the 
struggle to overthrow injustice and oppression and achieve 
independence and individual equality. Let us not forget its 
past one hundred and thirty years of eventful history, replete 
as they are with many chapters of severe trial, over all of 
which it has ever risen superior. This splendid history has 
placed our system of government beyond the line of experi- 
ment, and raised it to such an elevation of recognition and 
respect, that it now ranks as the highest among all the nations 
of the earth. 

Born of the spirit of resistance to oppression, with the 
broadest and freest constitution that the world has ever 
known — a land of freedom and equality in the best and most 
liberal sense of the term — it would seem that the sincere 
lover of liberty and equality could ask no better home than 
this democracy of ours — whose glorious flag floats over eighty- 
four millions of prosperous and enlightened people. 



EUROPE AND THE UNITED STATES CONTRASTED. 841 

To further add, the term " contented people " might, per- 
haps, not be a strictly true assertion, and neither would it, 
in my opinion, be a desirable one to use; for to the spirit 
of discontent and ambition, so predominant in the American 
character, are due largely the grand achievements and the re- 
markable progress and advancement of our nation in all 
things that make for greatness, strength, and public welfare. 
However, we must be careful to draw a plain line of contra- 
distinction between that discontent which is really the main- 
spring of human activity, and which, appreciating the solid- 
ity and soundness of our foundation, aspires to build thereon 
to the highest ideals of perfection and success — and that mis- 
guided or malicious discontent of Socialism which arrays 
itself as an enemy of all civilized forms of government and 
seeks their utter destruction. 

We can well understand and appreciate, in a country 
ruled by a despot, whose heel of oppression and tyranny is 
ever on the necks of the down-trodden people, the feeling of 
the masses who, desiring some measure of free action and 
equality, would revolt against such conditions, and seek a 
reorganization of society. They would, naturally, look as far 
away as they could from such a government of despotism — 
the only one they had ever known — to the other extreme — a 
country where the State should own all the land and capital, 
employ all the people, and divide everything, share and share 
alike, among the community. 

But the spirit of revolt, which in that case may be patriot- 
ism, becomes ridiculous and open to the charge of insincerity 
when the tenets of its doctrine are transplanted and cultivated 
upon American soil by our foreign population. 

With further reason, also, must we question the sincerity 
of the Socialist, who, leaving oppression behind, emigrates 
to this country, where tyranny and despotism are unknown, 
and yet who continues to echo that war cry of destruction 
wrung from his heart by the cruelty of his old-time op- 
pressors. 

He comes here from a land of want and thraldom to a 



842 INDIVIDUALISM VERSUS SOCIALISM. 

land of plenty and freedom. He may come without name, 
fame, or property, and he is received with open arms. After 
a brief residence he is entitled to full citizenship, and is then 
a part of the government, enjoying all the rights and privi- 
leges of the native born. Besides the active or public equality 
— the equality possessed by all, the right to share in the 
government, such as the electoral franchise and eligibility to 
public office — he has the rights of private equality. He is 
possessed of legal equality — the equal possession of private 
civil rights enjoyed by all citizens. Then there is the equal- 
ity of material conditions — that is, the right to acquire 
wealth and all that wealth implies. 

Every opportunity to achieve success and happiness abounds 
on every hand, and every incentive to industry and accom- 
plishment awaits him; and if he is energetic and skilful, 
there is nothing to hinder him from becoming prosperous, 
or, in other words, successful in whatever vocation in life 
he may pursue. With qualities that commend themselves 
to his fellow men, there is no limit to the possibilities of his 
achievements, and very soon (as has been very often the 
case) he may become a leader of men. If, therefore, he is 
sincere, surely he must agree with me that, in view of these 
conditions, this is no place for the Socialist. And does it 
not sound like a paradox to hear this cry of Socialism still 
rending the air — while every avenue of fortune lies open to 
every one? 

Socialism is self-contradictory, and opposed to deep-rooted 
and ineradicable human instincts. Its origin is, of course, 
purely selfish; but there are two kinds of selfishness — the 
enlightened and unenlightened. Unfortunately, Socialism 
belongs chiefly to the latter. It is often overlooked that the 
identical love of gain which seeks to equalize the distribu- 
tion of wealth will not be satisfied with equality. A desire 
for gain will still remain and seek to acquire. The most 
commendable object in Socialism is the uplifting of the down- 
trodden and poor. Yet that great commoner and tribune of 
the people, William Jennings Bryan, tells us that under 



SOCIALISM WOULD DWARF AMBITION. 843 

Individualism we have seen a constant increase in altruism. 
That the fact that the individual can select the object of his 
benevolence and devote his means to the causes that appeal 
to him has given an additional stimulus to his endeavors. 
And Mr. Bryan pointedly asks the question : " Would this 
stimulus be as great under Socialism ? " Let it not be for- 
gotten that by means of present tendencies and existing eco- 
nomic laws the poor are constantly growing richer. They 
were never so prosperous as to-day. Labor has made great 
strides, and the uplift in the lower walks of life in all Christ- 
endom during the past twenty years has been beyond prece- 
dent. Give us wise and just legislation, and complaints 
about the inequitable distribution of wealth will quickly 
disappear. 

The state of society that the Socialists seek to establish 
may be beneficial to a class which, under any conditions, 
lacks frugality, thrift, and self-reliance; but just where the 
general mass of humanity is to be bettered or elevated, so- 
cially, morally, or politically, is a point not satisfactorily 
explained. A society in which all human beings do right, 
for the simple reason that it is right, cannot exist unless 
human nature is recast and reconstructed. Human nature 
must be treated as it is found in the general makeup of man, 
and, therefore, a society in which all special desires, all am- 
bition, and all self-esteem have been eliminated, precludes 
development and progress. It reduces everything to utter 
shiftlessness and stagnation. In such a society there can 
be no incentive to great achievements in art, literature, me- 
chanics, and invention. If all are to be placed on an equal 
footing, the ignorant with the educated, the dullard with the 
genius, and the profligate with the provident, what encour- 
agement is there for special effort? 

If you render accessible to each and every member of the 
human family the achievements and benefits of civilization, 
holding " property in common," why should a man rack his 
brain or strain his muscles in producing something which he 
expects to prove remunerative to himself in some way, but 



844 INDIVIDUALISM VERSUS SOCIALISM. 

which, under the Socialistic state, would go to the equal 
financial benefit of all? 

Just for a moment, stop to think of the effect of bringing 
all men as near to a dead level as possible, for I recognize 
that not even Socialism would secure the equality which it 
seeks. If one physician is more skilful than another, who 
could insist that he receive no better reward than the less 
skilful, when many would be willing to offer it? Or how 
else could he avoid having all the patients in the community 
upon his hands except by charging more for his services than 
an inferior physician? If one lawyer shows greater ability 
than another, is he not entitled to a larger fee for his talent ? 
And how else is he to protect himself from taking all the 
business from the lawyer of less ability ? Again, if the skill 
of the cabinet maker is higher and rarer and worth more 
than that of the carpenter, how can the latter expect the 
same compensation as the former? To put both on the same 
plane would be unjust, and would lead to one being com- 
pelled to work beyond his strength, while the less skilful 
would probably be insufficiently occupied. Socialism, you 
thus see, would often place a premium upon laziness and 
inefficiency. 

Socialism would benefit the shiftless and lazy at the ex- 
pense of the thrifty and industrious. Is that a good system 
to advocate and follow ? Which of you would be willing to 
share your hard-won provision for your own family with 
another family, the head of which you knew to be lazy, in- 
capable, and dissipated? What incentive to struggle would 
remain if the results of that struggle were to be taken away 
from you and given to others who sat idly by ? What would 
be the effect upon the United States of throttling the ambi- 
tion to achieve ? Take the necessity of struggle out of life, 
and we should quickly weaken human nature. Civilization 
would decline and national decay quickly follow. True, the 
competitive system works harshly upon the weak and in- 
competent. This, however, opens a channel for development 
of benevolence, kindness, and patience, without which human 



SOCIALISM WOULD PUT ALL ON A DEAD LEVEL. 845 

nature would be exceedingly one-sided and forbidding. The 
indigent, unfortunate, and weak will always be a charge upon 
the stronger, whether in the family, the municipality, or the 
state. It is folly to think that life can be lived without 
struggle ; and that is one of the chief delusions of Socialism 
which would quickly impair our national manhood and en- 
durance. Trouble and pain have their part in the plan of 
nature. 

The Socialist is usually an unfortunate or misled indi- 
vidual. He has probably suffered from reverses or unfor- 
tunate environment. He has perhaps been roughly or cruelly 
handled. Perhaps he cannot get on satisfactorily, or his 
ambitions have been disappointed. He is then in a condition 
of discontent ready to swallow Socialistic — or any other — 
sophistries which hold out the delusive promise of relief. 

Socialism attaches too little importance to the fact that 
men are made with an infinite variety of tastes, abilities, 
and capacities. No two are precisely alike, and it is utter 
folly for poor, weak man to undertake to equalize these dif- 
ferences. All progress in history has been made through 
struggle and sacrifice; and Socialism, no matter how benefi- 
cent its intentions, cannot change the inscrutable laws of 
nature or humanity. All natural laws have their reverse 
side. Gravitation, which keeps us firm on our feet so long 
as we are on solid ground, knocks us to pieces if we attempt 
to walk off a housetop or over the opening of a pit. It is 
not the natural law, but the attempt to ignore it, that gives 
us trouble. 

I most emphatically assert that we cannot get rid of com- 
petition, any more than we can get rid of the law of gravi- 
tation. 

The American inventor, mechanic, farmer, merchant, and 
financier, and the worker in every profession, are, every one 
of them, proud, respectively, of their skill, knowledge, and 
ability. Their ambition is to excel — to produce the most 
and best Experience, enterprise, and courage create oppor- 
tune conditions most favorable to the State and Nation and 



846 INDIVIDUALISM VERSUS SOCIALISM. 

to themselves. Each vies with his fellow man in producing 
the best results, and is always willing to tackle any obstacle 
— no matter how formidable — that stands in the way of suc- 
cess. In his whole compendium and entire makeup, there is 
no such word as fail. He aids, by his untiring and indi- 
vidual energy and effort, in making his country the greatest 
in the whole agricultural, industrial, and financial world. 
He reaps the reward of industry and accomplishment, and 
his home is blessed with bounty; and he knows that his 
children have equal opportunity with himself to learn and 
to achieve. 

Shall he be asked to tolerate, or consider, the sacrifice of' 
all these things, so dear to him, for Socialism? 

Shall he be led to believe in a foreign plan or system of 
government that degrades skill, eliminates acquisition and 
thrift, and ignores genius? I cannot think so! 

These are the very qualities and attributes that he prizes 
so highly, as essential to the prosperity of the home and 
nation. He knows (or should know) that to do so would be 
to deaden and relinquish those God-given qualities of heart 
and brain that have helped to make him and his country 
what they are to-day. 

He knows (what the nations of the world concede) that 
the American people are the most prosperous of all on the 
face of the globe; and that this high and commanding posi- 
tion has been attained under existing conditions, and through 
the operation of our admirable system of government. 

Whatever, therefore, may be the pretexts used to make him 
dissatisfied with his lot, his own experience tells him every 
day that the Constitution under which he lives is a glorious 
one, and so implanted in the hearts of the American people 
as to be impregnable against the assaults of Socialism. 

At the same time, he is appreciative of the fact that it is 
not in the nature of things to expect in this world blessings 
pure and unmixed ; but he is thankful for the superior good 
that he enjoys under our beneficent democratic form of gov- 
ernment. 



SOCIALISM WOULD CURB ENTERPRISE. 847 

A state of Socialism in the United States would tend to 
drive all our men of superior ability, skill, and power out 
of the country. The strong would quickly seek other fields 
where the qualities which they possess would have a free 
chance and an open field. They would promptly desert a 
country that offered nothing better than a dismal dead level, 
with no means of achievement in sight, and the nation would 
quickly fall into a state of miserable inertia or decay. Our 
forefathers came to this country to establish religious free- 
dom ; they next fought for political freedom ; afterwards they 
sacrificed a million lives for race freedom ; and now we, their 
successors, with such glorious traditions behind us, must 
stand for industrial and social freedom. For, in the final 
analysis, Socialism can stop at nothing short of industrial 
slavery and political bondage. Great achievements would 
be impossible under it. 

Having shown the force and importance of individual ini- 
tiative and independence and the necessity for the spur of 
competition to bring about the best results in human welfare 
and achievement, I now turn to the rather concrete branch 
of the subject, known as Municipal Ownership. 

Naturally, a proposition involving the placing of the own- 
ership and operation of our railroads, telegraph lines, plants 
for supplying light and surface transportation, and conduct- 
ing manufactories and business, is one of such vital concern 
to all of us as to arouse our keenest interest. 

It is a part and parcel of the Socialistic plan of govern- 
ment, and, to a very great extent, the arguments and illus- 
trations presented in my treatment of Socialism, generally, 
are of direct application to Municipal Ownership. 

I would term it the entering wedge of Socialism, adroitly 
resorted to by its advocates. These Socialists well know the 
temper of the American people toward their propaganda and 
wild project, and at the same time they recognize the peculiar 
trait of character disclosed by Americans in their curiosity 
and liking for anything new. Hence, they grossly exagger- 
ate the shortcomings and ills that exist in our body politic 



848 INDIVIDUALISM VERSUS SOCIALISM. 

as constituted; and, at the same time, extol, in an extrava- 
gant manner, the superior conditions that would follow the 
taking of a small portion of the Socialist's infallible cure. 

Municipal Ownership, as far as I have been able to ob- 
serve, is also a pure and simple political move to secure votes 
for aspirants for office, and it is used for this purpose, re- 
gardless of any other question. It is one of those planks that 
we often see inserted by parties in their platform, to stand 
upon, to attract and gather in the votes. So Socialism has 
its uses — for them. 

I will admit that there are many economists who have 
presented a friendly side to the Socialistic theories involved, 
and have prepared able and extended articles in their en- 
deavor to support or uphold such theories (either in whole 
or in part) ; and it would be unjust to include them in the 
same category with politicians and Socialists. However, if 
that statesman was only half right who, in speaking of the 
tariff, said that the question was a business one, and that a 
condition and not a theory confronted us, then I feel that I 
am right in saying that " Public Ownership " is a practical 
business question entirely — and not a theoretical one. 

There are so many logical and unanswerable reasons 
against this Socialistic proposition that I feel it incumbent 
upon me to enlarge only upon the practical ones, that I know 
more about, than upon those of the theoretical group. 

The experience of years has demonstrated that at the pres- 
ent time all business enterprises require rare ability and 
experience, if not genius, to ensure success. 

Great financiers and successful men have devoted their 
lives to the study and practice of their trade and business. 

How is it possible, then, for municipalities to expect such 
qualifications from officers whose term of office is for one or 
two years, or during the tenure in office of a political party ? 

In the economy of commerce and its daily conduct and 
operation, there are numerous divisions or departments', each 
one of which can only be understood, appreciated, and con- 
ducted by men of special training and fitness — who have 




From stereograph. Copyright, 1007, by Ciiclerwooii & Underwood, N. Y. 



THOMAS F. RYAN. 



PRIVATE AND MUNICIPAL OWNERSHIP. 849 

given years of application thereto — and it is only by their 
watchful care and expert management of each of these divi- 
sions that a possible success is derived or business made 
to pay. 

The smallest neglect, the merest indifference to details, or 
the inattention that always accompanies abstraction by some- 
thing else — taking one's mind off his business — upsets the 
whole system, and means waste instead of saving economy, 
loss in place of profit, and inevitable failure as the result. 
That this is true there is not the slightest doubt, and would 
be readily confirmed by the leaders of every industry. 

Animated by a desire to make the best possible showing, 
for use at the next election, a false economy would be exer- 
cised under Municipal Ownership, and no attention would 
be paid to obtaining useful new inventions; and needed im- 
provements and extensions would, likewise, be ignored. 

On the other hand, under private ownership, the best pro- 
fessional talent is employed, at salaries unheard of in public 
office ; and all the latest inventions and improvements are at 
once utilized, giving the public up-to-date service. 

The active, modern business man, keenly alive to the re- 
quirements necessary to ensure profit and success, perceives 
at a glance the evils and mischievous results that would in- 
fect everything carried on under this Socialistic plan. And 
as John Stuart Mill well says : " The mischief begins when, 
instead of calling forth the activity of individuals, the mu- 
nicipality substitutes its own activity for theirs." 

'No serious attempt has ever been made to show the possi- 
bility of securing and retaining, under some rule of munici- 
pal civil service, or otherwise, the best men to assume the 
burden of management and responsibility. As already ex- 
plained, it would be practically impossible to secure the best 
men, and no system of civil service has yet been formulated, 
intended and able to provide for their retention. 

In this connection, a fitting illustration is the case of 
Colonel Waring, who instituted and maintained the best 
street-cleaning system we have ever seen. His work was 



850 INDIVIDUALISM VERSUS SOCIALISM. 

simply marvelous, and he made New York City a model of 
cleanliness. 

No one ever questioned his ability or integrity ; yet, while 
at the very zenith of his success, he was asked to resign, and 
obliged to leave the city employment to make room for the 
choice of a new city administration. 

The defects and fallacies of Municipal Ownership which 
I have described permeate all government ownership. Offi- 
cial reports and statistics furnish convincing proofs and con- 
clusive evidence of the failure of this system as conducted 
abroad, and more signal loss and damage — in an incalculable 
degree — would surely follow its adoption here. Just in pro- 
portion as our interests and enterprises are the greatest and 
most successful, as compared with other nations, would be 
the immensity of our depreciation and collapse. 

The United States is so different from other nations in 
its political system that this fact alone precludes serious con- 
sideration of our adoption of this imported Socialistic hobby 
and political heresy. It is also a country whose every chap- 
ter of growth, progress, and prosperity is a continuous narra- 
tive of individual efforts of its citizens. They, naturally, 
prize individuality as they do independence itself, and have 
every reason to believe that .the present system of government 
is the best for them, and that this land of Individualism is no 
place for Socialism. 

Imagine New York under Municipal Ownership of our 
public utilities! We should then have fastened upon us a 
more colossal and more corrupt Tammany than even existed 
in Tweed's times. Graft would thrive beyond all dreams 
of avarice. Let us take a lesson from England in this re- 
spect, where public ownership has been tried on a larger 
scale and under more favorable conditions than elsewhere. 
In a few instances the running of street railways or city 
lighting plants has been successful, but exceptions do not 
always prove the rule, and the conditions under which these 
enterprises have been operated there must be taken into con- 
sideration. English cities are comparatively free of political 



MUNICIPAL OWNERSHIP IN ENGLAND. 851 

corruption, and are, moreover, often served by men of high 
character, wealth, and ability — men having a strong sense 
of civic duty, who deem it an honor to give their community 
efficient service. Unfortunately, we have not yet developed 
a class of this sort in the United States ; perhaps in due time 
we shall; but, until then, the experiment of Municipal Own- 
ership had better be indefinitely postponed. A weak point 
of Municipal Ownership has usually been the financial end 
of the business concerning which the public has been poorly 
informed. Many of these enterprises in English cities have 
proved unprofitable. The accounts have been juggled, and 
expenses that should be charged against the plant were often 
transferred to city accounts. Not a few of the English cities 
have so run into debt as to injure their credit and impair the 
sale of their securities. Already, the British taxpayer is 
beginning to complain about the costliness of these Municipal 
Ownership schemes, and a decided reaction against them is 
setting in. The London County Council has launched heav- 
ily into these ventures, many of which have proved losing 
ventures, and some prominent experts have gone so far as 
to predict that London will be bankrupt before long, unless 
present tendencies are reversed. If Municipal Ownership 
has failed under the highly favorable conditions which exist 
in England, how can it succeed here? Again, the English 
telegraph system operated by the British Government does 
not compare with the private systems of the United States, 
either in efficiency or cheapness, and England with its public 
telephones is very far behind the United States in efficiency 
and cost. London does not begin to have the number of tele- 
phones per capita that New York can claim. American rail- 
roads under private ownership perform the best and cheapest 
service in the world. 

If any further argument were needed to convince you that 
the United States is no place for Socialism, its root or 
branches, it may be found in the radical and quite amusing 
change of front shown by Major Dalrymple, of Glasgow, 
upon the occasion of his visit to this country. He came here 



852 INDIVIDUALISM VERSUS SOCIALISM. 

at the request of Mayor Dunne, of Chicago, and the Munici- 
pal Ownership League of New York, to aid the forces of 
Socialism in their efforts in behalf of Municipal Ownership. 
He was the great Apostle of that doctrine in Glasgow, and 
the very man, in their opinion, to convert our people to that 
system. 

Upon his arrival here, he was greeted with great eclat by 
the League of this city, and gave out an interview in which 
he spoke as follows: 

" I see no reason why any city in this country should not 
be able to own its street railways, and to run them with as 
much success as we have achieved at Glasgow. I admit that 
the proposition is a much larger one than the one we had to 
tackle, but at the bottom it is the same." 

This was before he knew our country and its institutions. 
After an extended stay here, he prepared for his homeward 
journey, but before sailing, he was again interviewed, and 
to the surprise and discomfiture of the Socialists, he retracted 
all that he had said before in favor of Municipal Ownership, 
in the following language : 

" To put street railways, gasworks, telephone companies, 
etc., under Municipal Ownership would be to create a polit- 
ical machine in every large city that would be simply im- 
pregnable. These political machines are already strong 
enough, with their control of policemen, firemen, and other 
office holders. 

" If, in addition to this, they could control the thousands 
of men employed in the great public utility corporations, the 
political machines would have a power that could not be over- 
thrown. I came to this country a believer in public owner- 
ship. What I have seen here, and I have studied the 
situation carefully, makes me realize that private ownership, 
under proper conditions, is far better for the citizens of 
American cities." 

The New York papers aptly called this " The conversion 
of the Scot " ; and this blunt and honest admission coming 
from their own authority, that Municipal Ownership in this 




From stereograph. Copyright, 1906, by Underwood & Underwood, N. Y. 



JOHN W. GATES. 



OUR BENEFICENT AND MALIGN SOCIAL FORCES. 853 

country was wholly impracticable, stunned and paralyzed its 
agitators, and caused many of its adherents to leave the 
ranks of Socialism. 

Mr. James Bryce, the worthy newly appointed English 
Ambassador to this country, pointed out some twenty years 
ago, in his " American Commonwealth," how the then future 
of the United States sometimes presented itself to the mind 
as a struggle between two forces — the one beneficent, the 
other malign ; the one striving to speed the nation to a port 
of safety before the storm arrives, the other to retard its 
progress, so that the tempest may be upon it before the port 
is reached. He further expressed concern as to whether the 
progress then discernible toward a wiser public opinion and 
a higher standard of public life would succeed in bringing 
the mass of the people up to a high level, or whether the 
masses would yield to the temptation to abuse their power 
and seek violent and vain and useless remedies — like Social- 
ism — for the evils which would affect us. 

This able statesman predicted that the question would be 
decided early in the present century, and would be evidenced 
by the condition of progress and prosperity brought about 
by the people in the meantime. 

When the Ambassador was recently welcomed to our 
shores, the answer to this question concerning us, asked by 
him so long ago, was found awaiting him. 

It was spoken clearly and loudly by our teeming products 
of agriculture and mining, and echoed in thunder tones by 
our mammoth shops and factories of industry, and it was 
seen shining in the happy faces of our busy and prosperous 
people. 

Upon the golden page of to-day in our splendid history 
will stand out the assuring fact that this surpassingly suc- 
cessful state of things has not blossomed and come forth un- 
der the blighting shade of the deadly Upas tree of Socialism, 
but that it has all been developed by and through Individ- 
ualism. 

In conclusion, let me impress upon you that Individualism 



854 INDIVIDUALISM VERSUS SOCIALISM. 

in the United States has stood all tests — especially the cru- 
cial tests of time and experience — and it points with pride 
and satisfaction to the great developments secured for the 
American people under the bright and beneficent rays of our 
admirable Constitution and Eepublican form of government. 
And if the aim of all government is to ensure prosperity 
to the country, and happiness to the people it controls, the 
unrivaled excellence of Individualism may fairly be judged 
by its magnificent results. 

Edwin Markham, Esq., the Author and Poet, being agreed 
upon by both parties to the debate, presided at the meeting. 

At the close of the above address the chairman addressed 
the 5,000 assemblage as follows: 

" Ladies and Gentlemen : I hope you have enjoyed 
listening to Mr. Clews's very able address as much as I 
have. He swept the entire horizon and has left nothing 
more to be said on his side." 

Mr. Markham then introduced Professor Kirkpatrick, to 
combat Mr. Clews' s arguments. 



CHAPTER LXXVII. 
GREAT WEALTH AND SOCIAL UNREST.* 

Mr, Chairman, Ladies and Gentlemen: 

I THINK that you will agree with me when I say that 
there is nothing more commendable and that augurs 
better for the future of the institutions of our country — our 
great American Eepublic — than the interest shown by all 
classes in the important sociological questions of the day. 
The general willingness of our citizens to solve the serious 
problems involved by rationally debating them, and allowing 
careful consideration and calm judgment to lead the way to 
honest conviction, is one of the good signs of the times. 

We are progressive in spirit as well as in our practical 
achievements, and, in many respects, we have set the pace for 
other nations. 

At one time, we know, capitalists and leaders of industry 
too often either wholly ignored the discontent or appeals of 
the laboring people in their employ, or subject to their in- 
fluence, or, if appreciating the causes of their discontent, 
showed no disposition whatever to right their wrongs, or even 
to define their own views and position, or make any attempt 
to defend their own side of the case. 

This was the attitude of Capital toward Labor in former 
times that I may liken to the Dark Ages. It was, of course, 
radically wrong and unjust. The refusal, or, at least, the 
unwillingness, of Capital to recognize the fact that there are 
two sides to every case was not only oppressive, but often led 

* An address delivered by Henry Clews at the Thirty-fourth Annual 
Assembly of the Chautauqua Institution at Chautauqua, N. Y., July 29, 
1907. 



856 GREAT WEALTH AND SOCIAL UNREST. 

to costly and destructive strikes, and, doubtless, in a measure, 
retarded development and progress in industrial and other 
human affairs. But now Capital is showing more readiness 
to meet Labor on the same platform of discussion; and in 
keeping with this opening of the door to fair and full two- 
sided discussion is the general tendency of legislation to im- 
prove the condition of the masses, and the Chautauqua In- 
stitution in holding this Convention to consider the question 
of Social Unrest is entitled to great credit for the perform- 
ance of a most laudable service in the interest of education 
and progress and the uplifting of humanity. It is sowing 
the seeds of future advancement and greatness in those di- 
rections. r 

The fact that Social Unrest exists, and moreover is very 
prevalent, not only here but throughout the world, cannot be 
denied. Thus, in Russia, just emerging from the throes of 
a deadly and costly war, the spirit of discontent and Nihilism 
is rampant, and in France the Terrorists are gaining in 
numbers and clamoring for their rights, while Austria and 
Germany are greatly disturbed by the constant persistence 
of the violent and revolutionary Socialists in railing against 
society and government as they now exist. In Great Britain, 
too, the Socialists have stirred the people to uneasiness by the 
loud threats, and rule or ruin alarms, that they are sounding. 

While this unrest and discontent are especially great in 
foreign countries, we cannot shut our eyes to the fact that 
these exist in the United States — though not in such large 
proportions as in Europe. Moreover, they are largely of a 
different kind and quality. 

But it is not well for us to give undue recognition to the 
Socialistic outcries in this country, for by so doing we might 
encourage and aggravate a condition that, to my mind, is an 
equal menace to both Capital and Labor — the two great liv- 
ing forces of our national life. We may increase an evil by 
magnifying it. 

Too much appreciation and regard cannot, however, pos- 
sibly be shown to that spirit of unrest existing among us, 



BUSINESS ENTERPRISE AND SOCIAL UNREST. 857 

which leads to individual betterment and national develop- 
ment, and which is especially characteristic of the American 
people. 

Ever since the blazing torch of civilization threw its 
bright light upon the world, it has been the paramount dis- 
position of man to add to his possessions and to aspire to 
higher and better conditions. In this he is distinguished 
from savages and the lower orders of animal life, which have 
no perception of what we call ambition and achievement. 

Man being endowed with a mind, it is through the exercise 
of his mental faculties that he is made restless under unsat- 
isfactory conditions ; and civilized man is fired with a desire 
for improvement, and particularly to improve his own for- 
tunes and position by increasing his possessions, and acquir- 
ing distinction, or reputation in his business. This is well, 
so long as it does not degenerate into graft, or the misuse of 
other people's money. 

It is this unrest and this aspiration that constitute the 
great incentive to human progress, and that have given us 
our cultivated fields and teeming harvests, endowed and mul- 
tiplied our noble edifices of learning and religion, built our 
large and splendid cities and homes, our great bridges and 
other engineering works, and our vast factories and other busy 
hives of industry. This is laudable ambition that stimu- 
lates national development. 

We must, however, be careful to draw a plain line of de- 
marcation between that unrest I have described, and which 
springs from an appreciation of the solidity and soundness 
of our foundation and aspires to build thereon so as to realize 
the highest ideals of perfection and success— and that mis- 
guided or malicious unrest and discontent incited by So- 
cialism. This is really at enmity with all civilized forms of 
government and all measures of advancement in the right 
direction, and seeks their overthrow and utter destruction. 

The spirit of unrest that I have commended, and which I 
have termed an American type, is not noisy and clamorous in 
its nature, and it manifests itself mostly through organiza- 



858 GREAT WEALTH AND SOCIAL UNREST. 

tions of labor, in demands for adequate or increased compen- 
sation, or the fixing of a stated reasonable number of hours 
to constitute a day's work. With these purposes, and the aims 
of Labor-Unions generally, I want to state that I am in the 
fullest accord. The laborer is worthy of his hire, as the 
Bible says. 

But it is not from this source that the wail and cry of 
Social Unrest comes. No, " The shallows murmur, while the 
depths are dumb," and it is from the other and Socialistic 
class that we hear the government and its institutions decried, 
and capital and commerce attacked, and the spirit of compe- 
tition and achievement assailed. I say, Down with these as- 
sassins of good government, these assailants of law and 
order ! 

True, we see Labor strikes in some places; but these are 
incidents that have not been uncommon at any time in the 
past, and are not marked or significant enough now to form 
a particular feature of the prevailing Social Unrest. We 
have not yet reached the Millennium! 

But whence comes the Socialist's expression of unrest and 
discontent, and what is it based on ? It reminds me of Don 
Quixote, and the fight against a windmill. 

What is the sum and substance of the Socialists' grievance ? 
They see only evil in what is really good government, and 
none are so blind as those who will not see. 

They claim to be dissatisfied with the existing order of 
things. But what remedies that are not revolutionary do they 
prescribe for the cure of existing social and political ills? 
The fact is that many Socialists at heart are anarchists ! 

In almost every instance you will find among the rabble at 
a Socialist meeting some honest but mistaken theorists, who 
plausibly find fault not only with the conduct of our govern- 
ment, but with the very form of our government itself, and 
picture, under the delusion they cherish, an utterly impossi- 
ble Utopia where — 

" The people all are blessed 
And the weary all have rest." 



GREAT WEALTH AND SOCIAL UNREST. 859 

These visionaries are reinforced by pretended reformers 
and professional agitators, often of great persuasive powers, 
who appeal strongly to the passions and prejudices of the 
ignorant people of various nationalities who are made to 
imagine that they are still downtrodden. Here, in my opin- 
ion, lies a real menace and danger — that of these people being 
carried away by the power and passion of such appeals, the 
inflammatory utterances of reckless demagogues and fire- 
brands. They are the public enemies we have most need to 
guard against. 

The path of safety lies in standing ready to discuss every 
proposition which they advance, and then refute, with cool 
reasoning and argument, the fallacy and falsity of their po- 
sition and the destructive doctrines they teach. 

It will also be very noticeable that the people comprising 
the Socialistic audiences at such meetings are mostly for- 
eigners who, seeking better social and political environments, 
emigrated to America, a large part of them within the past 
decade or two. As discontented aliens they become as dan- 
gerous as the firebrands they listen to, but there is no spirit 
of self-sacrifice among them. Moreover, they are slaves to 
what is worst in Socialism and blind followers of a false 
god! 

That this peculiar condition of things should exist in this 
country seems almost paradoxical. It is something that a pa- 
triotic American cannot tolerate, and mainly an outcome of 
Kussian oppression, imported by those who have fled from 
it, and who fail to understand or appreciate the new condi- 
tions under which they live. We can well understand and 
appreciate how, in a country ruled by a despot, whose heel 
of oppression and tyranny is ever on the necks of the down- 
trodden people, the masses, desiring some measure of free ac- 
tion and equality, would revolt against these conditions, and 
seek a re-organization of society. They would, naturally, 
look as far away as they could from such a government of 
despotism — the only one they had ever known — to the other 
extreme — an imaginary country where the State should own 



860 GREAT WEALTH AND SOCIAL UNREST. 

all the land and capital, employ all the people and divide 
everything, share and share alike, among the community. 
Such a government will, of course, never exist. It is simply 
impossible. 

But the spirit of revolt, which, in that case, may be pa- 
triotism, becomes ridiculous, and open to the charge of in- 
sincerity, when its worst doctrines are transplanted and cul- 
tivated upon American soil by our foreign population. When 
it appears here it is really more like Anarchism than Social- 
ism, and I emphasize this. 

Born of the spirit of resistance to oppression, with the 
broadest and freest constitution that the world has ever 
known — a land of freedom and equality in the best and most 
liberal sense of the term — it would seem that the sincere 
lover of liberty and equality could ask no better home than 
this democracy of ours — whose glorious flag floats over eighty- 
four millions of prosperous and enlightened people. 

With further reason, also, must we question the sincerity 
of the violent type of Socialist, who, leaving oppression be- 
hind, emigrates to this country, where tyranny and despotism 
are unknown, and yet continues to echo Socialism's war-cry 
of destruction, wrung from his heart by the cruelty of his 
old-time oppressors. When he does this he becomes an enemy 
of our Kepublic, unworthy of citizenship. 

He comes here from a land of want and thraldom to a land 
of plenty and freedom. He may come without name, fame, 
or property, and he is received with open arms. After a 
brief residence, he is entitled to full citizenship, and is then 
a part of the government, enjoying all the rights and priv- 
ileges of the native born. He is a sharer in the equality pos- 
sessed by all, the right to share in the government such as 
the electoral franchise and eligibility to public office. He is 
possessed of the civil rights enjoyed by all citizens in the 
equality of material conditions — that is, the right to acquire 
wealth and all that wealth implies. 

Every opportunity for him to achieve success and happi- 
ness abounds on every hand, and every incentive to industry 



NO EXCUSE FOR SOCIALISM IN AMERICA. 861 

and accomplishment awaits him, and, if he is energetic and 
skilful, there is nothing to hinder him from becoming pros- 
perous, or, in other words, successful in whatever vocation in 
life he may engage. With qualities that commend them- 
selves to his fellow men, there is no limit to the possibilities 
of his achievements, and very soon, as has been very often 
the case, he may become not only wealthy but a leader of 
men. 'If, therefore, he is sincere, surely he must agree with 
me that in view of these conditions this is no place for the 
Socialist. He must be an ingrate who would fail to appre- 
ciate the splendid boon. 

Does it not, indeed, sound like a paradox to hear this cry 
of Socialism still rending the air while every avenue of for- 
tune lies open to everyone ? It is a glaring anomaly of the 
times, an offence to American institutions, a poor return for 
our national hospitality. Vague and illogical as the theories 
advanced by the doctrinaires of Socialism are, there runs 
throughout all their teachings and preachings bitter and rad- 
ical opposition to individual accumulation of wealth and in- 
dividual competition in industry. 

Socialists would, in other words, fence up the great field 
of free opportunity, deaden all incentive or inspiration for 
great achievement and not only curtail, but wholly remove 
the right to compete and excel and make it impossible to 
achieve success as the result of individual effort. They would 
reduce us all to a barren uniformity. 

Think of this monstrous proposition ! Why, the very thing 
that the Socialists attack as untenable and wrong in govern- 
ment, namely, individual competition, has done more than 
anything else to make us what we are as a nation ; has kept 
alive the precious fires of liberty and freedom, and preserved 
the institutions of our country. Take away the progressive 
spirit of Individualism from the people, and you at once elim- 
inate the American spirit — the love of freedom — of free in- 
dustry — and free and unfettered opportunity — you take away 
indeed freedom itself ! 

The state of society the Socialists seek to establish might 



862 GREAT WEALTH AND SOCIAL UNREST. 

be beneficial to a class which, under any conditions, lacks fru- 
gality, thrift and self-reliance; but just where the general 
mass of humanity would be bettered or elevated socially, mor- 
ally or politically, is a point not satisfactorily explained, and 
never will be. 

If you render equally accessible to each and every member 
of the human family the benefits of civilization, all holding 
" property in common," why should a man rack his brain or 
strain his muscles in producing something which he expects 
to prove remunerative or beneficial to himself in some way, 
but which under the Socialistic state would contribute to the 
equal financial benefit of all? The highway to distinction 
and opulence would be closed. 

As illustrating the inconsistency of some poor specimens of 
human nature, when put to the test of Socialism, I will tell 
two stories: 

Jerry Sullivan had proclaimed himself a Socialist, and was 
being interviewed by his friend, Mike Casey. 

" Jerry, do you believe in dividing up everything with 
your neighbor ? " 

" Indeed, and I do that." 

" If you had two horses (Jerry had none) would you give 
one to your neighbor Flanagan % " 

" I'd be only too glad to." 

" And if you had two automobiles, would you give him 
one?" 

" Sure, Mike, I would. We should have share and share 
alike in this world." 

" And if you had two Angora goats (which Jerry did have) 
would you give one to Flanagan ? " 

" What, give him one of my goats ! Not by a jugful ! Let 
Barney Flanagan buy his own goats." 

One of my millionaire clients, on his return from a trip 
abroad, called upon me to pay his respects. In the course 
of our conversation he said he had become a confirmed Social- 
ist. I expressed surprise, and said, " Then, of course, you 
are going to divide up all your property with your less f ortu- 



THE POOR HERE ARE GROWING RICHER. 863 

nate associates ? " He said, " Oh no, but I want all the other 
fellows to do it." 

The most commendable object in Socialism is the uplifting 
of the down-trodden and poor, yet that great Commoner and 
Tribune of the People, William Jennings Bryan, tells us that 
under Individualism we have seen a constant increase in al- 
truism. That the fact that the individual can select the object 
of his benevolence and devote his means to the causes that 
appeal to him has given an additional stimulus to his endeav- 
ors. And Mr. Bryan pointedly asks the question : " Would 
this stimulus be as great under Socialism \ " Let it not be 
forgotten that by means of present tendencies and existing 
economic laws the poor are constantly growing richer, that is, 
better off, particularly as indicated by the savings bank de- 
posits. The common people and the savings banks were never 
before so prosperous as they are now. Labor has made great 
strides, and the uplift in the lower walks of life in all 
Christendom during this generation and particularly during 
the past twenty years has been beyond precedent. Give us 
wise and just legislation, and complaints of the inequitable 
distribution of wealth will quickly disappear. Let us put 
down and keep down the revolutionary Socialists and An- 
archists. 

Of course, if the unrest of a people is prompted by a desire 
to promote the good of the greatest number of their fellow 
beings it will be productive of lasting benefit to all in the 
long run. But if any combination of capitalists, laborers, 
politicians, or religious bodies, has for its aim the particular 
good of only a certain class or party, such action as they take 
will be prompted by selfish desire, and will work for evil and 
injustice. The great mass of the people of this country, out- 
side of the big cities, are not allied with either the members 
of labor unions or the very large capitalists, and the feeling 
of discontent is largely bred in cities, where it is magnified 
by the prominence given to it by agitators and the news- 
papers. 

The wage earner in the cities is more or less disheartened 



864 GREAT WEALTH AND SOCIAL UNREST. 

by the high prices of food supplies, the higher rents and the 
higher rates of interest on mortgages, and he argues that his 
pay has not advanced in the same proportion as the price of 
home necessaries. Mechanics and other laboring men are re- 
ceiving higher average wages than ever before, but the display 
of wealth in modern palaces for the rich, and the abundance 
of automobile and kindred luxuries among them, have kin- 
dled envy and whetted their desire for things beyond their 
means or hopes of attainment. While no law can change the 
nature of a man, and while we cannot expect an ambitious 
man with an elastic conscience to always become a benefactor, 
or a labor union leader, filled with hate, to become a saint, I 
hope that the agitation now existing may lead in time to a 
more general observance of the Golden Rule, to do unto others 
as we would they should do unto us. 

I may say here that I believe nine-tenths of the dissatis- 
faction of the masses is based upon mistaken ideas. Few 
men are capable of judging impartially of the rights or the 
motives which actuate those upon whom Fortune has smiled : 
Success may be often a matter of luck and opportunity ; but 
it cannot be denied that judgment, mental force and courage 
are the factors which are bound to insure success. 

I now speak not only of success from a monetary stand- 
point — for many of our most useful, intelligent and influen- 
tial citizens are comparatively poor — but of all success. Our 
larger cities are the hotbeds of unrest. The older generation, 
being anxious that their sons shall have more, and know more, 
than themselves, and enjoy the good things in life which they 
have desired but have not been able to obtain, now try to give 
their children a liberal education and fit them for what they 
consider more congenial or higher-class occupations than their 
own. 

The outcome of this is that the younger men, when their 
education is completed, drift into the cities, where they think 
they have a better chance of getting on in life. It is the same 
with farmers, laborers and mechanics. Their children desire 
to rise above their early environments, and wish to occupy 



MORE PRACTICAL EDUCATION NEEDED. 865 

positions where they can use their brains rather than their 
hands. Hence the many deserted farms in New England and 
in the State of New York, for poor soil is not sufficient cause 
for their desertion. It can be made good by fertilizers, and 
where there's a will there's a way. 

This discontent is producing a superfluity of clerks and 
other brain workers, who think work with the head more gen- 
teel than work with the hands, and a great shortage of farm 
workers that are needed to develop our agricultural resources. 
Even the children of the most ignorant foreigners are imbued 
with this ambition before they are able to speak our language. 
Too many despise honest labor and want to live by their wits. 
So we have a vast host of surplus politicians, office-seekers, 
promoters, brokers, lawyers, clerks, canvassers and drones. 

In olden days the young were willing to follow in the foot- 
steps of the old, and begin life where their fathers began. 
Now they expect to begin where their fathers leave off, and 
are dissatisfied and disappointed if they find that they have 
to start from the foot of the ladder. 

What we most need in this country to promote and popu- 
larize farm and village life, and check the general tendency 
of both young men and young women to drift to the large 
cities, is a change in our educational system. We should 
establish trade schools everywhere to teach the trades and 
practical sciences, and so make country-bred people proficient 
in occupations that they could follow on the farm, and in 
village a3 well as town life. This knowledge would induce 
them to stay where they were born, instead of rushing off to 
make or mar their fortunes in the overcrowded cities where 
many come to grief. Thus the congestion of population in 
the cities would be relieved, and the country generally would 
be able to retain the men and women it needs for its indus- 
tries that are now held in check by an insufficiency of labor. 
In this way we might gain millions of good mechanics and 
other useful workmen where they are most needed, and reduce 
the number of the inefficient and unemployed in the cities, to 
say nothing of the chronic idlers and the sporting, gambling 



866 GREAT WEALTH AND SOCIAL UNREST. 

and criminal classes. Men instructed for the professions 
would of course still study in the colleges, but the masses have 
no use to which they can put the higher education of even the 
high schools. 

There are a lot of well-meaning theorists engaged in so- 
called Social reform who are largely responsible for many 
things that add to the unrest in the poorer sections of our 
cities. Far be it from me to criticize anyone who has the 
desire to better the condition of his less fortunate brothers, 
but the work of many of these reformers reminds me of the 
man who threw a panful of kerosene on a small fire with the 
idea of putting out the flames. To be a true Social reformer 
a man must be well informed on conditions which obtain on 
all sides of life. A rich man may have acquired wealth by 
miserly habits, but if he has not been dishonest he is entitled 
to his savings, and no law can compel him to divide with the 
poor man who has been profligate in the use of his earnings. 
The thousands of immigrants who arrive at our ports each 
week are, for the most part, poor and ignorant. The greater 
number of them remain in our cities and add to the congestion 
and widespread poverty of the cities. But these same immi- 
grants are willing to work, and in a year or two, instead of 
being a charge upon the community, have savings bank ac- 
counts of their own. However, they are ripe for the reception 
of the gospel of unrest, as they have lived hitherto in places 
where the poor are always poor, with no lookout for improve- 
ment, and willingly listen to the agitator and prophet of dis- 
content. Mr. Roosevelt has said and done things in the last 
four years which have shaken our land. Many investors have 
thought that he had gone too far in his insistence that the law 
should be rigidly enforced, as they, innocent holders of securi- 
ties, had been made to suffer loss by the depression in prices. 
While it is hard that such losses should have been incurred, 
it is no fault of the President, and his action, in the long run, 
is to be of untold value to our national and individual pros- 
perity. If his actions will insure the fulfillment of the law 
by the magnates in power in our railroads and corporations, 



SOCIAL DISCONTENT AN OLD COMPLAINT. 867 

the little man will be on a par with the big man, and all in- 
vestments will be on a safer basis, and the dark secrets of the 
manipulator will give place to the open publication of rates 
and earnings so that a stockholder will know where he stands 
and what his company is doing. 

Daniel Webster, as far back as 1842, found that the spirit 
of unrest was in the air as it is now. In an address in that 
year he said: 

" There are persons who constantly clamor. They com- 
plain of oppression, speculation and the pernicious influence 
of accumulated wealth. They cry out loudly against all banks 
and corporations and all means by which small capitals be- 
come united in order to produce important and beneficial re- 
sults. They carry on mad hostility against all established 
institutions. They would choke the fountain of industry, and 
dry all the streams. In a country of unbounded liberty they 
clamor against oppression. In a country of perfect equality 
they would move heaven and earth against privilege and 
monopoly. In a country where property is more evenly di- 
vided than anywhere else they rend the air shouting agrarian 
doctrines. In a country where the wages of labor are high 
beyond parallel, they would teach the laborer that he is but 
an oppressed slave." 

I will here deviate to another division of the subject. 

Considerable uneasiness and unrest have been evinced not 
only by the Socialists, but by many others, as to whether 
great individual or corporate wealth — in other words, capital 
— is inimical and hostile to the public welfare and a menace 
to our institutions. 

I think that it can be clearly shown that this anxiety and 
unrest are without any good foundation. There is nothing in 
fact to justify this unrest. 

In our own country especially, where individual opportu- 
nities are practically limitless and where thought and effort 
are exerted to the utmost straining point, most fruitful, in- 
deed, has been the result. We have seen that the making of 
large fortunes coincidently with great general prosperity, that 



868 GREAT WEALTH AND SOCIAL UNREST. 

is, by those doing a profitable business on a large scale, is an 
inevitable economic result. 

The past forty-five years in the United States embrace a 
new era of wealth — an era in which the accumulation of vast 
amounts of money, or its equivalent, in individual and cor- 
porate hands, has accompanied the most marvelous national 
growth and prosperity in all history. 

New conditions have arisen, and new methods have had to 
be employed, while new men, equipped with new ideas, have 
not been found wanting to meet all requirements, and to keep 
step with the march of progress on both land and sea. Unlike 
the people of some of the older countries, where, as in Russia, 
they distrust their government, Americans do not hoard their 
wealth. They employ it. They have nothing to hoard it for. 
Their quickly acquired fortunes are generally lavishly dis- 
bursed, both in their style of living and their investments. 
With much of the money they put into circulation railroads 
are built and extended, mammoth factories are constructed, 
labor is employed on a larger scale than before, more farms 
are cultivated, and more crops are moved and exported. 
Through all the arteries of trade and commerce the wealth 
thus employed flows and adds to the growth and prosperity 
of the country. 

Keeping the wheels of commerce moving, by supplying the 
demands of the financial, mercantile, manufacturing and agri- 
cultural world with the " sinews of war," in the up-to-date 
American way, instead of merely gathering wealth and hiding 
it away, has been to my mind one great secret of our unprece- 
dented national advancement. 

Although it is impossible to demonstrate just how impor- 
tant an influence this practice of keeping wealth actively in 
use has played in helping to bring about and preserve the 
generally progressive and prosperous condition of affairs, 
there is evidence enough to refute much that has been said 
against the possession of great wealth, and also to show that 
the hostile or critical attitude of the press and the people 
toward it is unjust, and should be derided instead of being 




CHARLES M. SCHWAB. 



WEALTHY AMERICAN PATRIOTS. 869 

popular with the masses, as it is. The assistance which Amer- 
icans of great wealth have given the nation, in the founding 
and preservation of institutions for the puhlic benefit and in 
many other ways, has never been sufficiently appreciated or 
acknowledged. 

Wealth in good hands serves good purposes. The richest 
men of the Thirteen Colonies in the American Revolution 
were among the most active and self-sacrificing of American 
patriots. They included George Washington, John Adams, 
John Hancock, Thomas Jefferson, James Madison and Robert 
Morris, whose names are imperishable on our national roll 
of fame. 

In that glorious struggle for freedom, these wealthy patriots 
performed a leading and arduous part, and aided largely in 
effecting that grand result — the establishment of this great 
republic, the United States of America, under the best and 
freest Constitution in the world. 

Passing onward from that memorable time, we come to that 
of the Rebellion, when Secession reared its aggressive head, 
and the very life of our institutions was in extreme jeopardy. 
In the early part of the great Civil War — when the Govern- 
ment, friendless abroad, knew not which way to turn for the 
financial aid that it so sorely needed to defend itself and 
prosecute the war — history will recall that the great wealth 
of private individuals proved not a menace, but a blessing 
and a godsend to the Nation. These served their country 
well by coming forward with their wealth and buying United 
States bonds in large amounts when the risk was hazardous. 
By so doing they rendered patriotic public service that should 
make even the Socialists hesitate before condemning great in- 
dividual wealth as dangerous to the national welfare. 

I might in illustration of what I say enumerate instances 
almost without number where, from the rock-ribbed coast of 
Maine to the Golden Gate of California, under the benefi- 
cent rays of great gifts of the wealty the seeds of educa- 
tion have been sown broadcast and have grown into grand 
and telling factors in shaping the character of the rising 



870 GREAT WEALTH AND SOCIAL UNREST. 

generation of American manhood and the destiny of this 
great country. 

In keeping with the hostility, or unrest, concerning great 
individual wealth, and large corporate capital, we are at times 
, confronted by the bold assertion, made by extremists, that 
some limit should be set to the amount of property an indi- 
vidual may own. The impracticability and inadvisability of 
any such measure are at once apparent. You might as well 
try to limit the capacity or energy of an individual. When 
you prevent an individual from accumulating you at once dis- 
courage his productiveness. This is an axiom beyond dispute. 

As regards great corporate capital, I must admit that there 
has been in many instances, in the past, good cause for much 
of the unrest and dissatisfaction manifested by the people. 

Toward competitors large corporations have too often been 
unscrupulous, just as the railways were in giving rebates to 
control the heavy traffic. These illegal and reprehensible 
methods were pursued far too long, not only causing immense 
personal and commercial loss and injury, but shaking the con- 
fidence of the public in the large corporations called Trusts. 
These offences can, however, under our new laws, hardly be 
repeated in the future. 

Under the provisions of the Sherman Anti-Trust law, the 
Elkins Anti-Rebate law and other and later restraining stat- 
utes, condign punishment will, doubtless, be dealt out to of- 
fenders, and a rigid enforcement of these laws, and their 
necessary amendments, will be sufficient to regulate corporate 
bodies and stand as an aegis of protection for the nation. 

In this very active period of business reform overcapital- 
ization is an evil that must be classed with rebates, railroad 
discrimination, and other corporate abuses. This also applies 
almost equally to both the industrial and railroad systems. 
However much this evil may have been regarded and thought 
inevitable in the past, owing to peculiar and lax conditions in 
the pioneer days of railroads and industrial upbuilding, it is 
intolerable now, and should be made impossible in the future. 
There is not the slightest doubt that a great deal of the public 



EVILS OF OVERPRODUCTION AND OVEREXPANSION. 871 

unrest has proceeded from this source. But, with the stop- 
page of the evil, it ought to subside. 

Overproduction of any kind is a detriment to trade and 
leads first to extravagance and then to disaster ; overfeeding 
produces disease ; overtraining of an athlete weakens him and 
causes his defeat; overstudy racks the nerves of the student 
and unfits him for usefulness. Overwork kills man and beast, 
and ruins even our locomotives and machinery. Too much 
rain, too much wind, and too much sunshine spoil our crops ; 
too much confidence or too much caution prevents a business 
man from achieving success. There is a happy mecfium in 
all things which produces good results and promotes success. 
Under our modern system of financing our railroads and in- 
dustrial corporations overcapitalization has in many instances 
run riot and produced an overplus of undigested securities. 
This system of financing will surely lead to disaster if not 
curbed and conducted in a rational manner. If a company 
needs additional funds for legitimate purposes, such capital 
is a necessity which stockholders will willingly provide ; but 
the managers of corporations should be compelled to state ex- 
actly and definitely for what purpose such funds are needed, 
and should also be compelled to make a clear and definite 
report. 

Centralization of power in the hands of an able executive 
is a good idea if he prove worthy of the trust his colleagues 
confide in him, but, on the other hand, makes him a master, 
and them slaves, if he be unscrupulous and crafty. 

Happily, the days of overcapitalization are seemingly over, 
and an aroused public opinion will, no doubt, be expressed in 
whatever prohibitive laws are necessary, if those already en- 
acted prove insufficient. 

In, at least, some instances the existing laws seem inade- 
quate. It is likewise due to the sound corporations of the 
country, as well as to the public, that something further 
should be provided to overcome the feeling of suspicion toward 
them, and to keep the people informed as to their existing 
methods and the true condition of their affairs. 



872 GREAT WEALTH AND SOCIAL UNREST. 

The remedy for corporation wrongdoing is found in pub- 
licity! This publicity is the great need of the present and 
the future, and the public should demand it. It is a lamp 
that we should always keep burning. 

In a recent address delivered by me before the Wharton 
School of Finance of the University of Pennsylvania, I urged 
that the New York Legislature, as well as the Legislatures of 
the other States, should respond to the popular agitation for 
this publicity by passing laws requiring all corporations to 
make at least semi-annual reports of their condition, certified 
to by registered public accountants, with power invested in 
the State superintendents to order special examinations by 
such accountants at any time when deemed necessary, that is, 
whenever any of them were suspected of being unsound or 
irregular in their business methods. 

The question now to decide is what remedies can best be 
adopted to prevent a repetition of stock-watering. My plan 
is for the Government to appoint a salaried director in each 
of the interstate roads, this director to be on the executive 
committee also. His duty should be to act as a watchdog, 
and he should be required to report to the Interstate Com- 
merce Commission all crooked acts or suspicions of any; be- 
sides which the interstate roads should be compelled by law 
to issue sworn statements of their exact condition semi-annu- 
ally. Officials of railroad companies found guilty of any 
illegal acts whatsoever should be punished by imprisonment. 
Money penalties are of no use in stopping wrongs of wealthy 
corporations. 

Railroad discriminations and other abuses were incident 
and owing to our extraordinary development during the last 
half century, and especially to the striking failure of our Leg- 
islatures to keep pace with national progress. 

Let us briefly look into a few of the causes which were 
responsible for this railway abuse. Both before and after our 
recent Civil War this country was greatly in need of more 
railway transportation than it had, and national development 
was impossible without it. We had millions of square miles 



THE INFANCY OF OUR RAILWAYS. 873 

of territory rich in natural resources, but totally undeveloped 
and awaiting population, capital and transportation. Of 
course transportation had to be provided before either popu- 
lation or capital could venture with any freedom into the 
Great West. In those days it was vastly more difficult to raise 
$1,000,000 for a new railroad enterprise than it was to pro- 
cure $100,000,000 in more recent times. The public was not 
accustomed to such ventures, and the country did not then 
contain the large number of wealthy men who must now be 
depended upon to back such great enterprises. 

In those days railroads required relatively large capital; 
the risks were new and great, and some means of securing 
large profits had to be devised in order to tempt men of means 
to venture into such enterprises, which from their very nature 
involved a long wait for profit. Our earliest railroad builders 
were men of unbounded faith in the future, and they well 
knew that many years of patience and outlay would be neces- 
sary before such enterprises could become profitable. It is 
almost axiomatic to say that in this country our railroads 
have been the principal factors in national progress. In the 
United States, railroads were called upon to develop both 
population and traffic. In Europe, population and traffic 
were already in existence and simply awaited the railroad. 
When railroad building first began, England was already a 
closely settled country ; and it was only necessary to construct 
the lines to obtain profitable traffic at once. No special in- 
ducements were necessary for the attraction of capital, and 
no preliminary period of waiting or loss was required to 
develop traffic. It was vastly different here ; railroads had to 
be built across thousands of miles of new country, frequently 
over apparently insurmountable mountains where neither 
traffic nor population existed; and their builders, men of 
monumental ability and enterprise, knew full well that a gen- 
eration must pass before such enterprises could be considered 
profitable and solid investments. 

Under such conditions what inducements could be offered 
to overcome such overwhelming obstacles ? While government 



874 GREAT WEALTH AND SOCIAL UNREST. 

aid was eagerly sought, it was restricted mainly to the Pacific 
roads where political reasons, such as unification of new ter- 
ritory, justified government support. Another form of na- 
tional aid was the giving of large land grants to railroad 
corporations as a stimulus to the settlement of new territory 
and the building of roads adjacent thereto. Even those helps 
were insufficient. 

Meanwhile, the treasures of the Great West offered irre- 
sistible attractions to new enterprise and settlement. The 
demand for more railroads was insistent; then came the de- 
vices of stock-watering and overcapitalization as inducements 
to new capital. Roads were often built entirely on bonds; 
and stock, having little or no value except for voting, was 
given away as a bonus with the bonds, or used for various 
purposes, often in speculation, and such stock frequently 
found its way back to the original promoters at bargain if not 
waste-paper prices. This era of speculative railroad building 
was naturally accompanied by all sorts of illegitimate opera- 
tions; overcapitalization bearing a leading part. ~No one 
would now dare think of resorting to such practices as were 
common in those pioneer days. They were utterly inde- 
fensible, and yet as an expedient they served their purposes 
in raising much of the capital with which to develop our early 
railroad systems. 

Our great railroad builders were fully entitled to great 
profits, since their boldness and skill developed the finest rail- 
road systems the world has ever seen, and without them the 
United States would never have obtained its present mag- 
nificent position and prosperity. We must admit their meth- 
ods were open to serious criticism, and would not be tolerated 
in these days of improved business standards. Nevertheless, 
they were the methods of the day, and must be judged as such. 
I do not wish to be understood as defending or apologizing 
for overcapitalization, for I consider it an economic evil of 
the most dangerous character, and its penalties — political as 
well as economic — cannot be averted. 

It should not be forgotten that the great wave of granger- 



AMERICAN RAILWAYS NOW SOUND. 875 

ism and antirailroad agitation which swept this country in 
the '80s was a direct revulsion of popular feeling against the 
burdens of overcapitalization and their tax upon traffic. These 
were the political results of such abuses. The economic con- 
sequences which followed — somewhat late to be sure — were 
witnessed in the reconstruction period that followed the panic 
of 1873, when vast millions of railroad capital were literally 
wiped out by the reorganization of railway corporations. 

To-day most of our railroads are comparatively free of over- 
capitalization, both because much of the water has been elim- 
inated by reorganizations, and because the increased value of 
terminals and other properties, as well as the large improve- 
ments that were paid for out of earnings, have increased the 
intrinsic value of shares which at one time may have been 
practically valueless. This process of accretion has been go- 
ing on for many years, so that now there is comparatively 
little difference between intrinsic and market values. Of 
course, some recent striking departures from sound railroad 
financing can be cited; but I am speaking in broad terms, 
and have no hesitation whatever in asserting that American 
railroad investments are now sounder financially than any 
similar class of securities in the world, and this notwithstand- 
ing that railway companies are compelled to borrow enormous 
sums in order to meet the demands of a wonderfully expand- 
ing traffic. 

A comparison greatly in our favor could be made with Brit- 
ish railroads which have for years been inflating their shares 
by a policy of charging improvements to capital account ; the 
American system being to charge such items against earnings. 
The result is that British railroad shares, which were once 
held up to us as models of soundness and honest capitalization, 
are now seriously threatened with an excess of water; and 
unless the present policy is changed, English stockholders will 
soon be discarding their home favorites for the bonds and 
stocks of more soundly managed American railroads. 

I have dwelt considerably upon the overcapitalization of 
our railroads. Now a word about overcapitalization in an- 



876 GREAT WEALTH AND SOCIAL UNREST. 

other direction, where it is a vastly more serious affair. While 
we now have little to fear from overcapitalization of railroads, 
an inflation has taken place in our industrials of the most 
extravagant character, and this is one of the most serious 
menaces to our industrial and financial future. A feature of 
our national development which has attracted world-wide at- 
tention during the last ten years has been the consolidation 
of nearly all our great industries into a few " Trusts." This 
era of consolidation, or " Trust-making," must be classed as 
an industrial revolution of the highest import, containing 
tremendous possibilities for both good and evil. Within a 
few short years a large proportion of our industries were com- 
bined or turned into Trusts, and securities issued in exchange 
aggregating about $6,000,000,000. 

Of course, many of the objects of these combinations 
were perfectly legitimate. The seeking of better and more 
economic methods of production and distribution was emi- 
nently proper, but the grasping for monopoly was not legiti- 
mate, and has proved more largely responsible for the political 
and social unrest of the times than any other single cause. 
Nothing has done more to stimulate Socialism than this un- 
wholesome tendency toward monopoly and excessive centrali- 
zation. On this feature, however, it is not my intention to 
dwell further ; I must even entirely pass over the overcapital- 
ization of public franchises as a subject of sufficient im- 
portance to demand special treatment. 

All things considered, however, I feel safe in saying that 
there is practically no more reason for unrest on the part of 
the business community or the people of the nation, on ac- 
count of the large aggregation of capital represented by 
Trusts, than from equally large sums in the hands of indi- 
viduals ; for both are equally controlled by law and influenced 
by public opinion, and public opinion is often more powerful 
than law in righting wrong. Moreover, public opinion makes 
the laws. As the Latin aphorism says, The People's voice is 
the Voice of God ! 

I take decided issue with a certain distinguished gentleman 



president's roosevelt's course justified. 877 

from Maryland, that the existing unrest has been brought 
about by the national administration at Washington, and by 
the Chief Executive of our country, and challenge the truth 
of this assertion. It is both a surprising and ridiculous ac- 
cusation. The leading men of thought — not only in the 
United States, but all over the world — agree that if, after the 
startling exposures of the life insurance and railroad abuses, 
President Koosevelt had not taken the sturdy and bold stand 
that he did, the confidence of the public would not only have 
been severely shaken, but would have been well-nigh up- 
rooted; and such a general spirit of unrest would have fol- 
lowed as to be truly alarming in its nature. 

As it was, his level-headed and courageous course was 
timely and almost providential, and instead of being the sub- 
ject of adverse criticism, he is entitled to the highest praise 
from all. Apart from some politicians and a few others, we 
are indeed all paying him this deserved tribute. He has 
often shown us that he possesses the courage of his convictions. 
In conclusion, while we doubtless all agree that the existing 
social unrest, anxiety and prejudice are to be deplored, may 
we not also unite in the hope that, under the educating influ- 
ence of a full discussion of the economic questions of the 
hour, and with the enforcement of the laws in the hands of 
an honest and courageous executive, the way to betterment 
will be thoroughly paved ? It is a patriotic duty to endeavor 
to lessen popular discontent and promote social and political 
peace and harmony, and substitute public confidence for un- 
rest and the violent agitation of Socialism, and so enhance the 
manifold blessings we enjoy as American citizens, yes, as 
citizens of the foremost nation of the world, with a future 
even grander than its past, a country where Nature is every- 
where lavish of her abundance, and freedom and independ- 
ence are our birthright. Beholding then, my friends, this 
grand spectacle of national progress and achievement even as 
it appears to us at this day, it certainly needs no prophetic 
tongue to foretell with confidence and absolute verity that to 
the true and ardent patriot and ambitious American, in fact, 



878 GREAT WEALTH AND SOCIAL UNREST. 

to every man inspired with lofty ideals and imbued with a 
spirit and desire for improvement and the perfection of demo- 
cratic government, the social and political vista of our coun- 
try's future will disclose a picture of prosperity and content- 
ment that will prove a glorious inheritance to the coming 
generations of the American people. 




From stereograph. Copyright, 1906, by Underwood & Underwood, N. Y, 



AUGUST BELMONT. 



CHAPTER LXXVIII. 
.THE FINANCIAL SITUATION* 

Mr. President, Members of the Kentucky Bankers* Asso- 
ciation: 

AS all know, we have recently passed through a crisis of 
distrust in Wall Street — distrust of corporate credit, 
and railway and other corporate stocks. This was reflected 
in what I may call a slow panic, a heavy and prolonged de- 
cline on the Stock Exchange under a continuous flood of 
liquidation by both investors and speculators. 

This crisis had been brewing for a long time, and we had 
a violent intimation of the dangerous and disturbing ele- 
ments in the financial situation last spring, culminating in 
the collapse of the stock market in March. But it was not 
until a United States Court at Chicago inflicted a fine of 
$29,240,000 on the Standard Oil Company, of Indiana, that 
investors, and the large capitalists of Wall Street, including 
Standard Oilers, took alarm. Then the trouble became acute. 

The Wall Street speculative multi-millionaires in particu- 
lar felt the shoe pinch very sharply. They had been trying 
hard to engineer a bull movement in stocks, for they were 
very heavily loaded with them. They had, however, met 
with indifferent success, for the outside public was out of the 
market and refused to come in. This huge and unprece- 
dented fine, these leaders of the bull movement saw, was a 

* An address delivered by Henry Clews at the Fifteenth Annual Con- 
vention of the Kentucky Bankers' Association in the Auditorium, Seel- 
bach Hotel, Louisville, Kentucky, September 18, 1907. 



880 THE FINANCIAL SITUATION. 

disconcerting and staggering blow at the property of corpora- 
tions, and consequently at the stocks of corporations. It 
amounted, if enforced, to confiscation, and they, as large 
speculators, like the rich and moderately rich investing class, 
reasoned that if the Standard Oil Company of Indiana could 
be fined and have its property confiscated in this way, other 
corporations would be liable to the same fate. They also saw 
that small investors and people generally would think and 
argue as they themselves did, and that their consequent dis- 
trust would lead to a heavy decline in prices* under heavy 
liquidation, through fear or necessity. 

So they reversed their tactics. In other words, they de- 
cided to run, and, being a little lame, they started early. 
Instead of continuing their bull movement in stocks, they 
at once withdrew their support from the market and began 
to liquidate themselves, for self-protection. The rank and 
file of the bulls, seeing that stocks were going down with a 
rush from this and other sources, were quick to do likewise, 
as if they thought the devil would take the hindmost, while 
the bears helped the market's descent by an unopposed and 
vigorous hammering. The bull leaders had abandoned it to 
its fate, and the banking interests were not willing to stand 
in the gap. 

The best and highest-priced stocks suffered the heaviest 
decline, and for a fortnight there was an outpouring of stocks 
and a downpouring of prices that finally carried nearly all 
of these below the lowest of March. Wall Street trembled 
in its boots. 

The decline was accelerated by the unusual scarcity of 
money on time, and the advancing rates for it, which under- 
mined confidence in the future of the money market, and 
in the ability of many corporations in urgent need of money 
to borrow on their collaterals, or obtain discounts. Tears on 
this score had very recently been justified by the failure of 
a large iron and construction company in "New York City, 
and when it was followed by a receivership for the Pope 
Manufacturing Company, the rush to sell stocks, and the 




ANTHONY N. BRADY. 



CORPORATE NEED OF MORE LIQUID ASSETS. 881 

fresh break in prices, added to the previous demoralization. 
The bears held high carnival, for their harvest was abundant 
enough to realize their dreams of avarice. 

It was feared that this failure might prove the beginning 
of a long line of similar failures, and there were many 
gloomy forebodings as to what would come next, either in 
the way of failures or State or Federal action against rail- 
way or industrial corporations, which would, by damaging 
their credit, lower the value of their stocks, and possibly 
imperil future dividends. We too often fear the things we 
think instead of the things that are. 

Through all this turmoil and disorder the want of money 
by many large corporations and the difficulty of borrowing it 
was always an uppermost topic. It touched their weakest 
spot, and showed the insufficiency of their working capital. 
They had large assets in plant and materials, but compara- 
tively little cash to carry on their large and increasing busi- 
ness. This made them dependent on the banks; and when 
the decline in stocks and bonds caused distrust that led to 
a curtailment or refusal of credits by the banks, they had 
nothing to fall back upon of their own. They were between 
the Devil and the deep sea. 

This want of a sufficiency of liquid assets is a common 
shortcoming among our corporations, both large and small, 
and therefore a great element of weakness, especially in 
periods of distrust, and should be remedied as far as possible 
in the future. It is better to do less business on a safe 
basis than could be done by extensive borrowing, with the 
hazard of failure in some unlooked-for crisis or time of 
depression. The greed of gain should be tempered by the 
wise admonition to make haste slowly. But unfortunately 
most people are in a hurry, and want to make short cuts 
to success. 

The August crisis, like all panics, was brought about and 
aggravated more by fears of impending trouble and false 
rumors than by actual occurrences. Sentiment often sways 
as much as facts, and the public had become extremely sensi- 



882 THE FINANCIAL SITUATION. 

tive to unfavorable news and constructions regarding the situ- 
ation, and comparatively blind and deaf to its favorable 
features. All this was ammunition for the bears on the 
Stock Exchange, and they made the most of it by steadily 
and relentlessly hammering stocks down, so increasing the 
depression caused by the liquidation of both speculators and 
investors, and the loss of confidence in values. But, like 
Oliver Twist, the bears still asked for more. 

This want of confidence was mainly due to exaggerated 
apprehensions of the effect upon railway and industrial cor- 
porations and their stocks of the Government investigations 
and prosecutions, and the hasty action of the States against 
the railways in eutting down their rates. Much of this 
State legislation is too restrictive, and will probably be modi- 
fied, or rescinded, after a trial. 

It was argued that there was no telling where and when 
the so-called crusade against the railways and the Trusts 
would stop, or what the final result would be. The bears 
and the alarmists were equally loud and excited in pointing 
to the twenty-nine-million fine as a sign of what, in varying 
degrees and amounts, might happen to other corporations, 
and bring ruin to many of them. Thus a merely unsettling 
influence was magnified into a formidable element of national 
disaster. As prophets of disaster, the bears outdid each other, 
regardless of their friends, the bulls. 

The threats and aggressive attitude of some of the Govern- 
ment's law officers alarmed many as much as their allegations 
against the corporations they prosecuted did, and they feared 
that irreparable harm to those corporations, and their busi- 
ness, would be done before their cases were finally decided 
on appeal, and that their stocks and bonds would suffer ac- 
cordingly, with, it might be, interest and dividends sus- 
pended. Thus they borrowed a large amount of trouble. 

With these feelings uppermost in the public mind, or at 
least influencing investors, it was not surprising that such 
a fever of distrust prevailed on every stock exchange in the 
United States, and that sympathetically and temporarily it 



THE EXTRAVAGANT STANDARD OIL FINE. 883 

somewhat affected the London Stock Exchange and every 
bourse on the European Continent. The situation had be- 
gun to look almost hopeless before reason began to take the 
place of hysteria among most investors and speculators. 
Then the indiscriminate slaughter of stocks prompted invest- 
ment buying, and the great scare, after two weeks of storm 
and stress, gradually passed into history, while prices, with 
occasional setbacks, responded to the change of sentiment by 
slow but general recovery. But whether this will be followed 
by a relapse or not remains to be seen. 

The apprehension excited among investors and speculators 
in stocks by that $29,240,000 fine against the Standard Oil 
Company of Indiana did an immense amount of harm 
through the enormous losses to which it led. In combination 
with the prosecution of the Southern Railway by Southern 
States, involving the conflict between North Carolina and 
Alabama and the United States Courts, that extravagant fine, 
so suggestive of opera bouffe, was the immediate cause of the 
heavy liquidation that produced this August crisis and turned 
the New York stock market into a storm center. Although 
there was no probability or even possibility of this fine ever 
being collected from a million-dollar corporation, even if 
affirmed on appeal, public sentiment was about as much dis- 
turbed as if it were ultimately collectible. By creating, al- 
though without sufficient reason, fear of confiscation, it led 
to those enormous sales and sacrifices of stocks by investors, 
as well as by speculators, and the virtual panic that lasted 
those two long and memorable weeks. 

The innocent thus suffered with the guilty, and the evil 
effect of such a fine was clearly demonstrated by a very severe 
and disastrous object lesson. The true remedy for rebating 
and other wilful violations of law is not to be found in the 
infliction of heavy penalties on the guilty corporations, but 
on the responsible and guilty officers of those corporations, 
and not alone by fine but by imprisonment. Heavy fines 
inflicted on corporations fall finally on their stockholders, 
through a corresponding loss of dividend-paying power, and 



884 THE FINANCIAL SITUATION. 

the lowering of market prices for their stocks. The proper 
remedy is punishment behind iron bars. 

As the stockholders are in no way responsible for delin- 
quencies in management, it is unjust to make them suffer 
the consequences of these. It should, therefore, be the future 
policy of both the Federal Government and the States to 
punish corporations for illegal practices by criminal proceed- 
ings against those in their employ who are found to be re- 
sponsible for them. Thus punishments will be confined to the 
guilty, and confidence will be restored among investors, for 
such prosecutions would in no way tend to depreciate the 
value of the stocks and bonds of the corporations concerned, 
but on the contrary they would tend to enhance their value 
by promoting honest management. This is a pivotal point 
to be kept constantly in view. Backsliders would be the only 
sufferers. 

The collapse in Wall Street stocks was, however, not so 
much due to the trust prosecutions, the Southern States Rail- 
way legislation, the twenty-nine-million fine, and the avowed 
policy of President Roosevelt's administration, as to the gen- 
eral condition of monetary affairs, and the condition of the 
stock market itself, although the causes enumerated started 
the August collapse. The outside public had for a long time 
been holding aloof from the stock market, owing both to the 
railway and industrial prosecutions, and hostile State legis- 
lation, and the great activity in trade, and in land, mining, 
and other speculation calling for a great deal of money. 
Speculation outside of Wall Street was never more ram- 
pant. 

At the same time stocks were very largely concentrated 
in the hands of a few men of great wealth, who were anxious 
to sell them at improving prices, and they could only do this 
by making a market for them. They had in this endeavor 
a hard row to hoe, as the farmers say, for money was scarce 
and dear on time, not only here but all over the world, with 
the European market, like our own, overloaded with securi- 
ties for sale, and, worse than all, with no demand for them 



WALL STREET LEADERS' CAPITAL TIED UP. 885 

from investors. They were in a tight place, rich as they 
were. 

This condition of affairs was reflected in the gradual and 
persistent decline of British Consols, that had always heen 
rated as the best and safest securities in the world, to 81, 
the lowest price at which they had sold since 1848 — the year 
of the Smith O'Brien uprising in Ireland, when they touched 
80. The depression in the other European stock markets 
was almost equally great, particularly in Berlin. We could, 
therefore, look for no market for our stocks, or our vast 
accumulations of new railway and other bonds, in Europe. 
The foreign markets were closed to us, and wanted nothing 
American but our gold. Our speculative capitalists loaded 
down with these unsalable securities were severely handi- 
capped. From being giants, they had become cripples. Their 
wealth was tied up instead of being in the liquid form of 
poorer men who had their money in savings banks, withdraw- 
able at any time. One New York City institution, the Bow- 
ery Savings Bank, held and still holds over a hundred mil- 
lion dollars of deposits. 

Here was wealth in a liquid form that our large Wall 
Street capitalists, like most of the large corporations, sadly 
lacked, and they well might have envied their poorer brethren 
who owned these deposits. In proportion to their means, the 
poorer men were better off than the rich. 

The fact is that our rich men undertook too much, both 
in the forming of syndicates to underwrite new bond issues 
and in attempting to control the stock market under adverse 
circumstances. They over-estimated themselves very largely, 
or, in slang parlance, bit off more than they could chew, and 
when the shoe pinched most severely in March, and again 
in August last, they had to sell stocks at a heavy sacrifice 
to pay off the loans that were called in by the banks, or to 
meet the calls for more margin. For once they were really 
hard up. 

This over-extension of Wall Street capitalists, with their 
efforts to unduly inflate prices, had its counterpart elsewhere, 



886 THE FINANCIAL SITUATION. 

for such over-trading was by no means confined to them, but 
extended to, and was conspicuously shown by, railway and 
industrial corporations in their efforts to keep up with the 
increasing demands upon them consequent on the country's 
great prosperity and natural growth. This over-extension 
was in the form of excessive expenditures and vast issues of 
bonds, stocks, and short-time notes. These far exceeded in 
aggregate amount the capacity of our own investors to absorb 
them. Hence, hundreds of millions of these are still being 
carried by the banking syndicates that underwrote them, and 
of course they at present show a. very heavy aggregate loss. 
This kind of medicine is much disliked even by multi-mil- 
lionaires. 

Stimulated by the country's enormous prosperity during 
the last few years, we have gone ahead too fast in all kinds 
of new and costly construction work and improvements. We 
have, in fact, gone ahead regardless of expense ; and railway 
and manufacturing corporations have stretched their credit, 
in too many instances, almost to the breaking point. Mean- 
while the railways have been overtaxed with traffic and the 
manufactories over-run with orders for their product, and 
they still are so notwithstanding all the much discussed and 
confidently predicted falling off in trade. 

Through over-taxing their capacity, their working capital, 
and their credit to keep up with it, the national prosperity 
has proved a two-edged sword to many corporations as well 
as individual firms, and the greed for excessive profits among 
them led to much of the corporate dishonesty, illegal acts 
and methods, and wholesale graft in high places which we 
have seen exposed. These excesses and irregularities are now 
being corrected. 

No wonder that their exposure, from time to time, gave 
blow after blow to public confidence, and kept investors from 
buying stocks, and turned their attention and speculative en- 
terprise in other directions, and into other channels. These 
exposures and violations of law naturally aroused severe 
public criticism and indignation, and called for investigation 



THE CORRECTION OF CORPORATE WRONGS. 887 

by the Federal Government. In this President Roosevelt 
took the lead for the purpose of correcting the mal-adminis- 
tration, the abuse of power, and the illegal practices that 
had been exposed. 

It was far from his intention to disturb public confidence 
among the stockholders of the railway and other corporations 
that, through their officers, had been guilty of illegal and 
fraudulent acts, particularly rebating. His object was by 
extirpating abuses to secure honest and lawful methods of 
management, and so protect and benefit investors in bonds 
and stocks, and secure justice and equality for shippers of 
produce and merchandise of all kinds, with the same rates 
for all, small and great, rich and poor, without special priv- 
ileges to any, great corporations being compelled to respect 
the law as well as small ones. The righting and correction 
of wrongs practised in violation of the Inter-State and anti- 
trust laws of Congress would have had no disturbing effect 
upon investors, and the public mind, if properly viewed ; and 
it requires a stretch of imagination to hold Mr. Roosevelt 
even indirectly responsible for the twenty-nine-million fine, 
the immediate cause of the disturbance in Wall Street that 
followed it. 

Under the general monetary and other conditions then ex- 
isting, that fine proved to be the last straw that broke the 
camel's back, and, as is too often the case, the innocent stock- 
holders were made to suffer with the guilty in the collapse 
of the stock market. The judge who frightened investors 
with visions of confiscation by inflicting that preposterous 
fine, must bear the responsibility of starting that downfall, 
not President Roosevelt. 

August, 1907, was one of the most remarkable months in 
the history of Wall Street. After opening in profound gloom, 
with the stock market crumbling rapidly away under the rush 
of investors and speculators to sell, regardless of price, and 
with the bears and alarmists busily at work predicting wide- 
spread disaster, few expected during the twelve exciting and 
perilous days of the crisis that the month would close with 



888 THE FINANCIAL SITUATION. 

the stock market gradually recovering, confidence somewhat 
restored, and many of both the bulls and the bears as unrea- 
sonably eager to buy as they before had been to sell, while 
the sentiment of the Street had changed from extreme de- 
pression and despondency to a cheerful and hopeful optimism. 
Incidentally the bulls were hanging the hides of some of the 
bears on the fence. 

When the fall in prices was greatest, new low records were 
reached for many of even the best stocks, not only for the 
year but for several or many years, as in the case of New 
York Central, which sold at 99^, or lower than at any time 
since 1898. In those twelve eventful days investors might 
well shudder, for market values shrunk about three thousand 
millions of dollars, if we include all the stocks dealt in on 
the New York Stock Exchange measured by their lowest 
prices and total capitalization. But, of course, the actual 
losses sustained were comparatively small. Wall Street as 
soon forgets its sorrows as its joys, and looks ahead. 

When at their lowest prices — and I give them as specimen 
bricks — Amalgamated Copper stock had depreciated 43 
millions, Union Pacific 51 millions, Northern Pacific 36 
millions, Great Northern 34 millions, New York Central 
25 millions, Pennsylvania 28 millions, and Southern Pa- 
cific 21 millions, while in the Curb market Standard Oil 
stock suffered a shrinkage of 80 millions, and American 
Tobacco stock of 32 millions. That much of oil seemed to 
have been cast upon the waters, and that much of tobacco 
to have gone up in smoke. 

The partial recovery in the stock market and the gradual 
return of confidence were coincident with and in the face 
of a rising market for cotton. There was an advance in 
middling cotton to 13^ cents a pound, the highest price on 
record for thirty-two years. Yet there was no dearth in 
the supply of cotton, and no sign of a " corner," or the 
possibility of one, and we carried over into the new crop 
year, which began on the 1st of September, a visible supply 
of 1,200,000 bales of American cotton, making a world's 



THE COUNTRY'S RECUPERATIVE POWER. 889 

supply of 2,300,000 bales, or nearly 540,000 more than at 
the same time last year. These statistics may be dry, like 
a certain brand of champagne, but they tell their story in a 
nutshell. 

I dwell on cotton because cotton is still king in the South, 
although less powerful in its sway than before the war, owing 
to the South' s development of its other resources and its more 
diversified financial and commercial interests. It is fortu- 
nate in not having all its eggs in one basket. 

The recuperative power shown by Wall Street, after the 
crisis, was typical of that of the whole country. Speculative 
sentiment quickly passes from one extreme to the other. We 
are a great and progressive people and soon recover from 
disasters however formidable. We had a conspicuous illus- 
tration of this in the San Francisco catastrophe, to say 
nothing of the civil war. But a period of stability and 
comparative quiet would now be salutary. The recovery 
in the stock market, notwithstanding the severity of the 
recent strain, was mainly due to the sober second thought 
of the people, in conjunction with the announcement of the 
plan of the Secretary of the Treasury to ease the money 
market by making deposits weekly in the National banks of 
the large cities till the middle of October. This allayed anx- 
iety as to the money market and it will, or may, have the de- 
sired effect in a large degree till the crop moving season is 
over, by preventing the undue locking up of money in the 
Sub-Treasuries at a time when it is most imperatively needed 
for business uses. The better feeling resulted, early in Sep- 
tember, in the 40 millions of New York City 4J per cent, 
bonds being bid for five times over, although at premiums 
averaging only a trifle more than 2 per cent. 

The very severe decline in copper and the copper stocks, 
this month, has, however, caused some renewed and wide- 
spread disturbance, and the reduction of dividends by the 
Calumet and Hecla and Quincy copper companies will doubt- 
less be followed by a general reduction of copper dividends. 
This is at present the worst feature of the general situation, 



890 THE FINANCIAL SITUATION. 

as it indicates a largely reduced trade demand for copper, 
and foreshadows a curtailment of copper mining. 

The Treasury plan is only a makeshift, however. The true 
remedy for this currency evil lies in the abolition of the in- 
dependent Treasury and Sub-Treasury system, and the sub- 
stitution in its place of now existing National bank depos- 
itaries. Congress should abolish it accordingly, and it 
probably will if the banks unite in demanding it, and so keep 
the currency in the banks, and in active circulation. The 
present antiquated system has been outgrown by the country, 
and is a reproach to our national intelligence as a great com- 
mercial people. 

Simultaneously with the improvement in conditions here, 
and partly because of it, for example is contagious, there was 
a decided turn for the better in both sentiment and prices on 
the London Stock Exchange and the Berlin Bourse. Appre- 
hensions which had been felt there of the trouble here ex- 
tending, so as to more or less seriously involve Europe, sub- 
sided when it was seen that we had regained our composure, 
and were going ahead as usual. The situation had indeed 
changed so much that it really looked as if nothing very dis- 
astrous had happened, despite the hysteria and the crash that 
followed the spectacular fine of that Napoleon of the bench, 
Judge Kenesaw Mountain Landis, a long name — or some of 
it — that will be remembered, especially by the Standard Oil 
Company, long after the fine has been set aside, or O.K.'d, 
by the United States Supreme Court. But it would be rash 
to assume that the trouble is all over. There are still many 
weak structures and disturbing causes that menace the situa- 
tion. There is future danger in a too sudden recovery of 
confidence, and in under-estimating the danger we have 
passed through. 

Meanwhile, because of what the Government has done to 
correct abuses in the management of the railways and the 
trusts, their stockholders will find that it has added to the 
security of their holdings of railway and other stocks, at the 
same time that it will prevent the acquisition of large for- 



PENALTIES ON MEN, NOT ON CORPORATIONS. 891 

tunes, in dishonest ways, at their expense. The business sit- 
uation will also be the safer and sounder and more con- 
servative for it, and its general betterment will compensate 
for the suffering involved in the ordeal we have passed 
through. Often out of evil there cometh good. 

All concerned in the ownership and management of cor- 
porations should willingly conform to the Federal laws now 
in force, and, if any of these should prove onerous, unjust, 
or defective, Congress can be called upon to amend them. 
They might as well make a virtue of necessity. The same 
course should be pursued with regard to railway rates, fixed 
by the respective States, until these, and their justice or in- 
justice, have been passed upon by the Supreme Court of the 
United States. Through this compliance with law the popu- 
lar craze against the railways and the Trusts will gradually 
subside, while the misconceptions and exaggerated views con- 
cerning Mr. Roosevelt's policy and its influence will die out 
in the clearer light of a better understanding. 

Of one thing we may be sure, and that is that President 
Roosevelt will always stand firm in his policy of enforcing 
the laws against wrong-doing by corporations. We heard this 
from Secretary Taft in his strong endorsement of that policy, 
and we heard it re-affirmed in the President's Provincetown 
speech. But the penalties should always be inflicted on the 
individual officers responsible for violations of law, and these, 
to be effectual, should involve imprisonment, not fines against 
them or the corporations. That remedy is the only certain 
cure for the disease, if it again appears. By uniting in sup- 
port of the President's policy, which simply means the en- 
forcement of the Inter-State Commerce law and the Sherman 
Anti-Trust law, as amended, those in control of railways and 
industrial corporations will increase the value of their stocks, 
and raise their credit both at home and abroad, while inspir- 
ing the other officers, and the rank and file of their employees, 
with a higher sense of honor, and responsibility to the public, 
than was compatible with the old rebating and graft-seeking 
trickery. 



892 THE FINANCIAL SITUATION. 

A large part of Wall Street was in such a nervous state 
during the crisis that it jumped at shadows, and trembled at 
a touch. It shuddered when Attorney General Bonaparte 
facetiously said that there was a fine covey of game among 
the large capitalists in control of corporations, and that he 
would be a poor marksman who would not bring some of the 
birds down. 

It found fresh cause for alarm in the fight between the 
Southern Eailway and the Southern States, and when the 
railway had its license canceled by Alabama it had a fresh 
attack of " nerves," and, later, saw an ominous event in the 
surrender of the railway to the State, to recover its license. 
It feared the anti-corporation storm would wreck and devas- 
tate the business of the country. But after a storm there 
cometh a calm, and the nation, as a whole, is unscathed. 

In considering the situation we must never fail to bear in 
mind that although investors, and holders of stocks and bonds, 
and many of the weaklings of the business world, have been 
made to suffer severely by the stern and uncompromising 
course of the Federal Government and some of the States — 
and that confidence was so undermined as to cause a tem- 
porary halt in enterprise — good results will follow. This 
ordeal has been at least a purifying one, and while the East 
has exaggerated its disturbing influence, the West and South 
have been comparatively indifferent to it. Those sections 
were never more prosperous and progressive than they are 
now. This arises from the fact that the East, being richer 
than the West, and having much more invested capital, espe- 
cially in stocks and bonds, is correspondingly more interested 
in the market for these than the West, and more disturbed by 
great depression in Wall Street, and the causes producing it. 
The East is, therefore, much more likely to borrow trouble 
than the West or the South, especially when it cannot bor- 
row money. 

This borrowing of trouble took the usual form of fearing 
from day to day that worse consequences of the crisis awaited 
us than we had yet experienced, and it was increased among 



TRADE AND FINANCE INTERWOVEN. 893 

business men and corporations when they found their banks 
would no longer accept as collaterals for loans and discounts 
many of the securities they held for investment, and upon 
which they had been previously able to borrow in proportion 
to their market price. They found, too, they were generally 
unable even to borrow, on time, what they wanted, on the 
best of collaterals. 

They were therefore cramped for money, and this re- 
stricted or embarrassed them in their business, and in a few 
instances caused their failure. Here we recognize the close 
connection that exists between trade and finance. The severe 
depression on the Stock Exchange so far impaired the market 
value of stocks and bonds as to make the banks and other 
money lenders everywhere distrustful of credits, the result 
being this inability to borrow, or at least to borrow all that 
was necessary. So it was not surprising that those with in- 
sufficient working capital were badly cramped, and had to 
curtail their business and make sacrifices, or go to the wall. 

The curtailment from this cause among mercantile and 
manufacturing firms has been very extensive. It was better 
than going to the wall, however, and the after-effect upon the 
business situation has been salutary and wholesome. It has 
acted like a safety valve in checking over-trading, over-capi- 
talizing, over-borrowing, over-stocking, and over-doing gen- 
erally. It has slackened the pace at which too many scant- 
ily equipped concerns were going on the road to ruin. So 
it has made the business situation stronger and safer for 
the sound and solvent; and the elimination of a mushroom 
growth of irresponsible credit-seekers should be welcomed 
by the banks. 

Wall Street is the great monetary clearing house of the 
country whose ramifications are co-extensive with the nation 
itself. It does not create values, but it reflects everything 
affecting securities and commodities, and represents all mate- 
rial interests. It is an unfailing barometer of values and the 
times. So those who say a heavy fall, or a panic, in stocks 
only affects Wall Street speculators shoot very wide of the 



894 THE FINANCIAL SITUATION. 

mark. Wall Street radiates its influence over the whole coun- 
try, and to a large and growing extent over the whole world, 
and it, or I should say New York, is destined, within no 
very long time, to become the financial center of the world. 
The recent severe financial disturbance in Wall Street, re- 
sulting in a reduction in the value of securities aggregating 
over $3,000,000, has proven one important thing, and that is 
that Wall Street and the industrial interests of the country 
have finally largely separated, and that a panic in Wall 
Street, while depressing, need not necessarily cause one at 
the same time in mercantile circles. 

~No doubt some of the Trusts and railway companies, ac- 
customed to driving with a too free hand, and without much 
regard for the law, considered they were being handled very 
harshly by the law officers of the Government when they were 
brought up with a round turn and heavily fined for rebating. 
But, as they had violated the law wilfully, they had only 
themselves to blame, and they well knew that the way of the 
transgressor is hard — when convicted. There was some rea- 
son, however, in the complaint of some of the railways that 
in many of the States they had been made the targets of an 
aggressive popular policy towards corporations, that is, the 
policy of enforcing rigorously laws which might in some 
cases, such as the passenger and commodity rate laws by the 
States, finally be declared unconstitutional by the Supreme 
Court of the United States. 

Our large railway and industrial corporations were pri- 
marily responsible for the disturbance and loss of confidence 
in the monetary situation through their recklessly extravagant 
issues of bonds, stocks, and short-term notes. For a long 
time they seemed to be doing their best to kill, in this way, 
the goose that laid the golden egg, and they finally succeeded 
in exhausting both their own borrowing power and the ability 
of the banks to lend, or of investors, at home or abroad, to 
purchase their issues. This tremendous output of new securi- 
ties had to be checked, for it not only glutted the market, and 
overloaded underwriting syndicates, but depreciated values 



HOW TO STOP CORPORATE ABUSES. 895 

and created distrust among investors. It was piling Pelion 
on Ossa with a vengeance. 

The collapse of last March in the stock market, and the 
more prolonged one of August, were obviously outbreaks of 
the same malady, the latter intensified by that twenty-nine- 
million fine. The distrust that caused these explosions had 
been brewing for years, and had its origin in the wholesale 
issues that over-taxed the money market and the lending ca- 
pacity of the country and also squeezed Europe like an 
orange for all the money it had to lend. 

It was righteous retribution that overtook some, at least, 
of the wrongdoers among the larger corporations. Their 
chickens had come home to roost through their own unre- 
stricted and extravagant exploitations and illegal and dis- 
honest practices. 

The wholesome remedy of their discontinuance, combined 
with proper curtailment and conservatism, has been forced 
upon them by the necessities of the situation; and the en- 
forcement of the new laws has no doubt put a stop to at 
least the most flagrant of the corporate abuses before preva- 
lent. But the too sudden application of the brake at a criti- 
cal turn in the road may at any time work havoc ; and it is 
doubtful whether rigorous prosecutions for violations of law 
in years gone by are not productive of more harm than good. 
They are always unsettling, and unsettlement involves a 
corresponding weakening of confidence. 

But future offences should be prosecuted with the utmost 
rigor of the law, and the railway companies and industrial 
corporations now fully understand this ; and not one of them 
would be likely to run the risk of again violating the law, 
especially with imprisonment for offenders as the penalty. 
We must, however, always be careful not to make the remedy 
worse than the disease. In other words, the interests of the 
country at large are of more importance than the punishment 
of corporate wrongdoers for long past offences. Some allow- 
ance must be made for the heat of competition in the strenu- 
ous years we have passed through, and the former general 



896 THE FINANCIAL SITUATION. 

tendency to moral laxity of men controlling and representing 
corporations, when acting in their corporate capacity, a laxity 
they would probably not have been guilty of in their own 
personal affairs. This would, of course, indicate their want 
of a proper sense of responsibility and honor. But that fail- 
ing is not uncommon. Now their eyes have been opened to 
the danger of being without it. 

The apparent indifference of some of the principal prose- 
cuting officers of the Government to investment interests, in 
the published interviews with them, was, however, complained 
of as of itself disturbing and disconcerting to investors. It 
may have indicated a supposition that only capitalists, specu- 
lators, and those of lar^e means were affected bv the decline 
in stocks and bonds. The erroneousness of this impression 
is shown by the stock transfer books of every large railway 
and industrial corporation, in which the small holders of 
small means are very numerous, running up to several or 
many thousands in each corporation, and reaching a very 
large aggregate of shares. The small investors thus suffer 
by depreciation with the large ones, and even the people of 
small means with only savings bank deposits are, as we can 
all see, menaced through their dividends by the deprecia- 
tion of the securities held for investment by the savings 
banks. Their depositors may learn a lesson in finance from 
this. 

Those of the State of New York report for the half year 
ending on June 30, 1907, a new high aggregate for deposits 
and resources, the deposits being $1,394,296,034 and the 
resources $1,490,760,675. Yet their surplus, calculated on 
the market value of their holdings of stocks and bonds, had 
fallen from $108,671,735 on June 30, 1906, to $95,743,206. 
Here we have a shrinkage through the decline in prices of 
nearly thirteen millions or twelve per cent, of their surplus, 
in one year, although the savings banks are by law restricted 
in their investments to the most stable of first-class securities. 
If we go back to their reports of January 1, 1901, we find 
their surplus was $118,294,674, showing that the market for 



HONESTLY AND DISHONESTLY ACQUIRED WEALTH. 897 

bonds has meanwhile been on a declining scale. Thus the 
savings banks and Wall Street are shown to be related. 

In this August crisis there was far too much hysteria 
shown where calm judgment was called for, and this hys- 
teria made the situation dangerous, although there was noth- 
ing dangerous in the actual condition of the country^ apart 
from the distrust of credits and the scarcity of money on 
time, resulting from the immense activity of general business 
here and the monetary stringency abroad. A moderate slow- 
ing down of business is consequently the best remedy for this 
excess, and the one that will in the most direct and natural 
way generally restore ease to the money market Meanwhile, 
the banks should assist within proper limits, when called 
upon, corporations and firms of proved earning capacity and 
known to be sound, and discriminate against those that have 
only an insecure or speculative foundation. This would ac- 
cord with the teaching of the Bible, " To him that hath shall 
be given and from him that hath not shall be taken away 
even that which he hath." 

The popular feeling against very rich men, who have ac- 
quired their wealth through the trusts and railways, is not 
a prejudice against property, but against the supposed ways 
and means by which their large fortunes were acquired. The 
impression is, with many, that those means were dishonest, 
and that their rapacious grasping for riches involved corrup- 
tion in corporate management, and, in general, a feathering 
of their own nests at the expense of the people, or at best 
other people. To see them flaunting what they consider their 
ill-gotten gains exasperates men, and spreads discontent and 
unrest among the millions. Envy and malice are easily 
cultivated. 

It is an inequality of wealth that they resent because they 
believe it to have been created by rebating, stock watering, 
inside speculation, and tricks and devices by which other 
people's money was got unjustly, and by various illegal and 
fraudulent practices and abuse of corporate power. The 
exposures made from time to time tended to confirm the 



898 THE FINANCIAL SITUATION. 

people in this impression and prejudice, and President Roose- 
velt was only responding to their call when he urged the 
prosecution of the corporations known to have been among 
the most flagrant violators of the anti-rebate law. 

These violators were not the corporations, which we all 
know have no souls, but their officers; yet the officers have 
gone thus far unwhipped of justice, much to the disgust of 
the masses of the people. But in future this defect should 
be remedied, and rich and poor among the individual vio- 
lators of the law should be prosecuted criminally, and upon 
conviction sent to jail like any other criminal. I can under- 
stand how many men, who as private individuals would have 
avoided criminal or wrongful acts, had no scruples about 
violating laws in their corporate capacity. This, however, 
is an indefensible plea. They showed a moral laxity which 
has been exposed and branded as a crime, and instead of it 
let us hope they have now a sense of corporate responsibility 
and honesty, as a result of these Government prosecutions, 
and the knowledge that in future such violations of law can 
hardly be repeated with impunity. They will certainly find 
that honesty is the best policy. 

The cry against Mr. Roosevelt has been so indiscriminate 
that it would often be amusing but for its serious aspect. 
If a corporation, firm, or individual fails in business nowa- 
days, Mr. Roosevelt is blamed. If a man makes a bad invest- 
ment in anything, or if his creditors press him for payment, 
or his creditors are slow to pay or go into bankruptcy, he 
blames Mr. Roosevelt, while the vast host of large and small 
investors in stocks and bonds all over the country are almost 
of one mind in blaming Mr. Roosevelt for the depreciation 
in the market value of their stocks and bonds. 

I should not be surprised if very soon even the ladies who 
have lost at the fashionable game of bridge will blame Mr. 
Roosevelt for their losses. Everyone, nowadays, dumps his 
misfortunes upon Roosevelt, and attributes the cause to him. 
I recently heard of a man who had been doing a thriving 
business on Long Island shore catching eels and selling them 



PRESIDENT ROOSEVELT AND THE LAW. 899 

in the New York market. Lately the eels have stopped going 
into his pots to be caught, so he is now going about howling 
against Roosevelt for ruining his business. That is no more 
ridiculous than many other things for which he is blamed, 
without having had anything to do with them. In thus 
complaining they overlook the long train of causes and events 
that led up to this year's disturbances in Wall Street. 

The public must have a scapegoat in times of excitement 
and discontent, and many of our wealthy people thoughtlessly 
held the President responsible for the disturbances and 
unsettlement we have witnessed, and their own losses and 
disappointments, because he had taken the initiative in call- 
ing upon the law officers of the Government to prosecute the 
railway and industrial corporations known to have violated 
the law. They seemed unaware that he did this to stop those 
illegal practices which had made enormous fortunes for the 
favored few, and enabled them to crush or impoverish their 
competitors and impose upon the people. He was the people's 
champion. 

He did not advise these prosecutions without good cause, 
for in every instance where a case was tried on its merits the 
Government secured a conviction. Fines of large, but not 
enormous, amounts were levied accordingly against many of 
our principal railway companies, including the New York 
Central, and against large industrial corporations, including 
the Sugar Trust, for rebating and accepting rebates. But 
as the punishment was always by fining the corporations, and 
never by the imprisonment of the officers, who were the actual 
violators of the law, the masses of the people complained that 
while they themselves would have been sent to jail if guilty 
of criminal offences, these high and mighty railway and Trust 
officials were not, and that by fining the corporations only the 
innocent stockholders were made to suffer instead of the in- 
dividual wrongdoers. Their complaint was just. 

I trace the causes of this year's state of affairs as far back 
as the failure in London of Baring Bros. & Co., in 1890, 
for that unexpected event gave a shock to confidence, and 



900 THE FINANCIAL SITUATION. 

curtailed credits all over the world. Indeed, the long career 
and prestige of that celebrated and honorable house gave it 
a credit in both hemispheres that was second only to that 
of the Bank of England, and its collapse wiped out of exist- 
ence the immense amount of credit and the banking facilities 
that it had enjoyed so long. This involved a corresponding 
international contraction of the medium of exchange, and 
tightened the purse strings of the world, and it continued to 
do so long after the failure had passed into history. 

The Boer war involved, in another way, great and pro- 
longed depression in England. It drained her of an immense 
amount of money, and drained her also of a vast number of 
men whose labor was needed at home. To raise the sinews 
of war, she had to issue from time to time large amounts of 
consols, and these, being in excess of the power of investors 
to absorb them, steadily declined, and now — years after the 
war — they are still heavy. It naturally surprised the world 
when last August they reached 81, the lowest point in their 
long decline, and John Bull was sorely puzzled to define the 
cause. 

The Russian-Japanese war was another very costly and 
depressing factor, and adversely affected international money 
markets because it involved immense borrowing by both Rus- 
sia and Japan, and their bonds are still helping to glut the 
European markets, and to some extent our own, as many of 
the Japanese bonds are held here. At the same time Erance 
is particularly unfortunate in being burdened with a vast 
amount of Russian securities, far more than ever before, 
which leaves her correspondingly powerless to make other 
investments, or extend assistance, when needed, to other 
countries. 

Then came our Pacific coast disaster, the earthquake and 
fire at San Erancisco, which involved enormous losses there, 
and struck Wall Street and its speculative capitalists a tre- 
mendous blow, for the latter were about as heavily loaded 
with stocks at that time as before the March crash, and these 
had a severe break in consequence. It also involved English 



THE GREAT DEPRESSION IN BOTH HEMISPHERES. 901 

and German as well as American fire insurance companies 
in heavy losses. 

The effect of this train of disastrous events, both here and 
in Europe, has been more or less cumulative, and their influ- 
ence was so great and far reaching that it is still being felt, 
especially by our rich and speculative Wall Street men, with 
little of their wealth in the liquid form they would prefer, 
notwithstanding their heavy liquidation. They are still tied 
up with large amounts of stocks and bonds, bought long ago 
at higher prices, and for which there is but a limited market. 
As the same condition of affairs exists in Europe, they may 
find some comfort in that fact, for we are told misery loves 
company. They certainly have plenty of it. 

Fortunately the reports of the National and State banks 
all over the country show that they are in a sound and strong 
condition, the result of proper conservatism, and in protect- 
ing themselves they have protected their depositors and stock- 
holders. So the banks have escaped being involved in serious 
losses through the crisis in the stock market, and are in a 
position, now that the depression, if not over, is at least no 
longer acute, to lend assistance in the recovery that sooner or 
later inevitably follows such a cyclone and excessive decline 
in prices as we have witnessed. 

The banks, however, have in common with all other holders 
of stocks and bonds suffered loss by the depression in price 
of the securities owned by themselves, this being, as I have 
shown, particularly the case with the savings banks, and it 
may possibly, if not soon recovered, lead to a reduction of 
their dividends. If it should so eventuate, it would be an 
object lesson that would show the poor man that even his 
savings bank deposit was not beyond the depressing influence 
of a Wall Street crisis. But let us hope that there will be 
no such far-reaching result. The savings banks have, how- 
ever, already deducted large amounts from the value of their 
holdings of securities on account of the past and present 
year's depreciation. Few of their depositors understand this, 
and where ignorance is bliss 'tis folly to be wise. 



902 THE FINANCIAL SITUATION. 

We are fortunate in being Americans and having so great 
a country under our sovereignty, for its vast geographical 
extent, its diversified interests and resources, and wide dif- 
ferences in climate make one section to a certain extent inde- 
pendent of another. Thus the South, the West, and the 
^Northwest looked with complacency upon the Wall Street 
crisis as something confined to the East. There was no fall- 
ing off in bank clearings, no lessening of the activity in trade 
South or West. The industrial and agricultural resources 
of the country were unaffected, and the outlook for the crops 
and trade is reassuring in all directions. Yet last month 
many feared the country was going to the dogs. 
« The last Government report indicates a decrease in the 
estimated crop of wheat, but with the invisible left-over sup- 
plies, it will fall little, if any, short of last year's crop, while 
the corn and other grain crops will largely exceed the demand 
for home consumption. The cotton crop, too, which the 
planters will soon begin to gather, promises to be almost equal 
to the last. Yet its price is much higher. The grain crops, 
by reason of damage to the crops in Europe and elsewhere, 
and higher prices, are likely to yield more when marketed 
here and abroad than in recent years. Our exports of cot- 
ton, too, in the last fiscal year were valued at more than half 
a billion of dollars, while our exports of manufactures aggre- 
gated 750 millions. Our coal, iron, copper, gold, silver, and 
other mineral products will be larger in 1907 than in 1906, 
and our total industrial income will show no diminution. 
Yet in August many felt as blue as indigo about the situation. 

I say all this to show that the railways will have all the 
freight traffic they want, and the enforcement of existing 
laws relating to them will be more likely to increase than 
diminish their net earnings, for they will gain largely by the 
stoppage of rebating and other abuses. Some of our State 
and possibly some of our Eederal laws may be too drastic, 
and, so far as their requirements are unreasonable, oppressive 
or unnecessary, they should, and doubtless will be, amended 
by Congress and the States, or set aside as unconstitutional 




y<lcctut*&tci4*£ 'LdtfC _ 



THE RAILWAYS AND THE STATE RATE LAWS. 903 

by the courts, as in the case of Pennsylvania's two cents a 
mile rate, for an unjust or vexatious law is abhorrent to 
justice — justice so well typified by that blind goddess who 
holds the scales on such an even balance in the world of art. 
Corporations, as much as individuals, are entitled to a square 
deal, and a square deal for all is what President Roosevelt 
is working for. 

As it is, most of the Western railways have, like the South- 
ern lines, a double track traffic for a single track road, and 
there is abiding prosperity in this plethora of business. It 
is a sort of embarrassment of riches, for, notwithstanding 
the vast additions that all the railways have made to their 
rolling stock and motive power in recent years, and the enor- 
mous amounts spent in building branches and double track- 
ing portions of their main lines, and increasing their terminal 
facilities, they are still unable expeditiously to cope with the 
present superabundance of traffic ; and this will naturally in- 
crease with the growth of population. So the outlook for 
their stockholders is better than ever. 

For his courageous course in unearthing and prosecuting 
the rebating evil and other wrongdoing, President Roosevelt 
is entitled to the highest praise ; and I reiterate that the heads 
of railway and other large corporations will best serve their 
own and the country's interests by co-operating with him and 
his administration to secure strict compliance with the law 
in future, with the hope of clemency for their past violations 
of law. 

That the railway companies always, as a matter of policy, 
are disposed to be conciliatory and not willing to be openly 
antagonistic to the enforcement of law, is beyond question. 
Like the American people, they are law-abiding. We saw 
an instance of this in the course of the Southern Railway and 
other Southern lines, in withdrawing their appeal from the 
State Court to the United States District Court in the rate 
case, and agreeing to charge only the State rates, namely, two 
and one-quarter cents a mile, in North Carolina, two and 
one-half cents in Alabama, and three cents in Virginia, till 



904 THE FINANCIAL SITUATION. 

a decision on the constitutionality of the State rate laws is 
rendered by the United States Supreme Court. This con- 
cession was avowedly made to avoid further conflict with 
those States, although the companies were within their legal 
rights in the appeal they had taken. They were wise. 

After the good work the Government has already done in 
exposing and punishing the rebate evil and other abuses, it 
would seem that the end in view — namely, their stoppage — 
has been substantially achieved. I therefore think you will 
agree with me that the Government can well afford to rest 
on its secured results and its laurels, and discontinue prose- 
cutions for old offences, while holding all to the strictest ac- 
countability for violations of law in the future. The law- 
breaking corporations have been taught a lesson that they will 
never forget, and have suffered penalties that they will not 
be willing to incur again. 

By the Government thus showing clemency towards the 
offenders they would all the more be put on their good be- 
havior, and the clamor against Mr. Roosevelt, in which they 
have been the leaders, would gradually subside. Those who 
have been punished by the law are always very likely to have 
a bad opinion of it, and to retaliate by charging injustice. 
Hence the old English saying, " ]STo rogue e'er felt the halter 
draw with good opinion of the law." 

This reminds me that the two international congresses of 
socialists held in England and Germany in August, one at 
Cambridge and the other at Stuttgart, showed what large 
masses of the people there are laboring to overthrow the ex- 
isting law and order of society by putting restrictions and 
fetters upon individual achievement, genius, and capacity for 
good work, and by giving the inferior masses all that they 
would allow the superior and educated to enjoy, a levelling 
process entirely inconsistent with Americanism, for it would 
destroy all incentive to great efforts, and reduce all to a uni- 
formity inimical to progress. Some of the decline in British 
Consols is attributed to this socialist agitation in England, 
and notably in the House of Commons, several of its members 



SOCIALISM IN EUROPE AND AMERICA. 905 

being radical socialists ; and the same is true of Germany 
and its Parliament. 

In Berlin, which has been for some time the storm-center 
of Europe, socialism and its revolutionary doctrines, and 
especially the meetings and preachings of the rampant of 
the socialists, have added to the disturbance, distrust, and 
depression caused by the monetary situation. There, as here, 
over-expansion in all directions had over-taxed the money 
market and glutted the Bourse, the banks, and the specula- 
tive capitalists with new issues of securities that were either 
unsalable, or salable only at a ruinous sacrifice, owing to the 
heavy shrinkage in prices, and the absence of demand at the 
low prices. This presents an almost parallel case to our 
own, except as to the effect of socialistic agitation. 

We have too many blatant socialists here, but they are not 
planted in congenial soil, and their demagoguery and schemes 
for the destruction of society as it exists will yield no harvest, 
for in this great country, where all are free and blessed with 
equal opportunities, there is no reason, no just cause, or 
excuse for socialism. The agitation in favor of socialism 
and its doctrines is not American. It is antagonistic to 
American institutions, and comes almost entirely from those 
who have fled from oppression and despotism in Russia and 
elsewhere in the Old World to our shores, and who fail to 
see, as they should, that the conditions which have given rise 
to socialism in Europe are entirely different here. So social- 
ism will never take root in the United States, however much 
it may be agitated by those of foreign birth who reciprocate 
our hospitality in giving them all the rights of citizenship 
that we possess ourselves, by advocating the downfall and 
destruction of our institutions and system of society, which 
has made this great nation of free and independent citizens 
what it is to-day, the wonder of the world. 

The Bank of Erance has continuously felt, but resolutely 
fought against, depressing foreign influences by tenaciously 
holding on to its gold, and it attracted more of it recently 
from this country by paying interest in transit. Both Lon- 



906 THE FINANCIAL SITUATION. 

don and Berlin have long been trying hard to get gold from 
France, but without success. This determined policy, and 
refusal to finance anything that would take money out of the 
country, is intended to fortify the Bank of France and 
French investors against a possible crisis due to their colossal 
holdings of Russian bonds. France is the guardian and 
watch dog of monetary Europe. 

While the situation in Germany is strained, that country 
is taking the lead in European manufacturing enterprises, 
and it is forcing its trade in all parts of the world. To its 
great expansion in industrial work, the locking up of capital 
there, in industrial enterprises of all sorts, is chiefly due. 
Tempted by great expectations capitalists have invested in 
them very heavily, and induced by high rates of interest the 
banks, and other large money lenders, have loaned enor- 
mously on industrial securities for which there is at present 
little or no demand from investors, and this conversion of 
their resources from a cash or liquid form to a form much 
more fixed than they expected, has very largely curtailed the 
supply of loanable funds to others, and caused or aggravated 
the long existing monetary stringency in Berlin. Yet, 
strange to say, Germany uses very few bank checks. The 
German Government, however, is about to consider a plan 
for regulating their issue and use. Even the Government sal- 
aries, aggregating $211,344,000, or 888 million marks, a 
year, are paid wholly in specie. Here we see 18 million dol- 
lars a month withdrawn from circulation, to return slowly. 
This is almost as bad as our Sub-treasury system. No won- 
der Germany is pinched for money. 

One indirect cause, hitherto overlooked, of the prolonged 
monetary stringency in Europe has been the absorption of 
gold by Egypt, India and China, and it has been sufficient to 
largely neutralize the effect of the increased gold product of 
South Africa, Australia, America and other countries. In- 
dia has desired gold of late years, instead of silver exclu- 
sively, as before, owing to the depreciation in value of the 
white metal, and China has been secretly absorbing it for {he 



EGYPT AND INDIA HOARDING GOLD. 907 

same reason, and with an ultimate view to placing that na- 
tion on a gold basis. 

Egypt, however, for several years has been largely buying 
gold with the proceeds of its large exports, which include a 
particularly fine quality of long staple cotton that commands 
a much higher price than ordinary cotton. This gold is ex- 
tensively hoarded by the Egyptian capitalists instead of being 
placed in the banks there, and entering into the monetary cir- 
culation. The consequence is that it is lost sight of, and lost 
to the world outside, for Egypt is not only distrustful 
of banks, but imports very little in comparison with what it 
exports. So it is enabled to keep what it gets in gold. This 
seems to me an answer to the question, "What becomes of the 
new gold? " 

The world's peace in the future is more likely to be dis- 
turbed on the Pacific Ocean side than on the Mediterranean. 
I predict that within the next few years all the great Eu- 
ropean nations will combine, in friendly relations, offensive 
and defensive, against the balance of the world, which means 
against China, Japan and India, that represent two-thirds of 
the world's population. If the United States wants to stand 
aloof and avoid being drawn in on one side or the other, the 
Philippines must be parted with. The contest of the Eu- 
ropean nations will be for commerce in the East, and the 
European powers, especially Eussia and Germany, will do 
all they can to breed trouble between the United States and 
Japan and would be glad to have both nations crippled 
through a war. So long as we hang on to the Philippines we 
will have a war cloud hanging over us. England, owing to 
her alliance with Japan, is in a better position to take care of 
the Philippines than we are, and if we could make an honor- 
able deal with England to exchange them for her South 
American possessions, it would be a good thing for us, as, 
when the Panama Canal is built, those islands will be of 
much more advantage to us than the Philippines, and by thus 
removing the bone of contention we would secure permanent 
peace. The Philippines will be a great source of expense to 



908 THE FINANCIAL SITUATION. 

us without any possibility of obtaining corresponding advan- 
tages ; therefore, why retain what will keep a sore spot open 
as long as we hold on \ We are not a colonizing nation — we 
have territory enough of our own within our own border, 
while England, on account of her meagre dimensions, re- 
quires colonizing for self-existence. 

I am inclined to think that it may turn out to have been 
a mistake for Commodore Perry to have opened the ports of 
Japan to the world — a caged lion being safer than one let 
loose. It resulted in Japan building herself up as a power ; 
then followed the war with China, which was instrumental 
in breaking down China's exclusive walled-in method of ex- 
istence. So that now China is also opened to the world like 
Japan; her 350,000,000 of people will get themselves on a 
war protecting basis, which will naturally make an alliance 
with Japan a necessity, and such an alliance will after a 
while require the European combination as an offset; other- 
wise, sooner or later some of the European nations will be apt 
to meet the same fate as old Rome at the hands of the bar- 
barians — simply wiped out of existence. China and Japan 
will fight for their self-preservation and commercial inter- 
ests. The 300,000,000 in India will fight for release from 
Great Britain's rule, and backed by fanatical inspiration, 
under skilled leadership, will make a dangerous foe some- 
time. Hence India's natural desires will make her akin to 
China and Japan, arrayed against any foreign foe. So India, 
China and Japan and the rest of the Orient, when well dis- 
ciplined and well equipped and led by Japanese generals, 
will require the combined European nations to hold them in 
check. The European nations have now had all the wars 
they want and they have gained through them their present 
forceful positions of independence, hence all future great 
wars will be to keep the 900,000,000 of people in Asia in sub- 
jection, and it will need all their combined power to do so. 

I will now come nearer home and glance at the rising star 
of the South. 

The continued material prosperity of the South is one of 



PRODUCTIVENESS AND PROSPERITY OF THE SOUTH. 909 

the best signs of the times, and it has given a legitimate for- 
ward impulse to the whole country. This section of the 
United States is in its natural resources more favored than 
any other, and presumably will ultimately become the rich- 
est. That indeed is its natural destiny under the industrial 
and agricultural development which will come from the 
growth of population, the consequent increase in the supply 
of labor and the progress of education. Here, indeed, you 
have a splendid prospect where distance lends enchantment 
to the view, and in aiding, encouraging and stimulating this 
development, on good business principles, none will be able to 
render better service than you Southern bankers. Already 
the South is progressing in actual agricultural and industrial 
wealth from year to year, and day to day, at a rate that would 
have seemed fabulous not very long ago; and the banker 
shares with the farmer this rapidly increasing prosperity, 
especially if cotton is selling at more than thirteen cents a 
pound, or even at ten cents. It is, therefore, to the banker's 
interest to co-operate with the farmer, for by so doing the 
benefit becomes mutual. You gentlemen, as Southern bank- 
ers, are favored by Providence in being where you have such 
a wide and splendid field for doing good to others on a safe 
and conservative basis, at the same time that you are build- 
ing up the South, and doing good for yourselves in the time- 
honored business of banking. 

While the South is increasing rapidly in actual and sub- 
stantial wealth, it is a good sign that this wealth is not going 
into a few hands, but being widely distributed among all 
grades of the population. The city, the town, the village, the 
factory and the farm give equal and abundant evidence that 
all are sharing this boon of material prosperity, resulting 
from their own industry and the Southern country's legit- 
imate development. You have, figuratively speaking, only to 
tickle the soil with a hoe, and it smiles with a harvest. 

The South produced last year crops and other raw products 
valued at two thousand millions of dollars, or four hundred 
and fifty millions more than all the United States, outside of 



910 THE FINANCIAL SITUATION. 

the South produced in 1880; and last year also its manu- 
factured products were valued at two thousand five hundred 
millions, or iive times more than it manufactured in 1880. 
This is the right kind of expansion. 

Last year, too, the increase in the assessed value of prop- 
erty in the South was eleven hundred millions, or three hun- 
dred and fifty millions more than the increase between 1890 
and 1900. Contrast the increase of seven hundred and sixty 
millions in that ten-year period with the increase of over 
sixteen hundred millions in the last two years — 1905 and 
1906. 

Such growth is as phenomenal as it is gratifying, not only 
to the people of the South but to the people of the whole 
United States, and it is not a forced but a natural growth. 
We see it most conspicuously in the development of its 
industries, for it has now two hundred and fifty millions 
invested in cotton mills, an amount exceeding the capital in- 
vested in cotton mills in all the United States in 1880. This 
alone is a grand exhibit. 

The South also is making pig iron at the rate of three 
million live hundred thousand tons a year, more than all the 
rest of the country made in the year 1880, and the capacity 
of the South for iron and steel making is practically unlim- 
ited. Turning to bituminous coal, the South mined eighty- 
five million tons of it last year, and in the last fiscal year the 
foreign exports of all kinds from southern ports were valued 
at seven hundred and thirty-four millions against only about 
two hundred and fifty millions in 1881. The South may well 
be proud of all this productiveness. 

So great is this material development and so great the con- 
sequent demand for transportation facilities, that every rail- 
way in the South may well need double tracking, while to 
keep pace with the South's present rate of progress, thousands 
of miles of new railways will have to be constructed every 
year for many years to come. The South should therefore 
continue to encourage capital no less than immigration, on 
a scale extensive enough to meet all its legitimate require- 



A LAUDATION OF KENTUCKY. 911 

ments. This is the work, Gentlemen and Bankers of the 
South, that lies before you. 

Now I come to Kentucky ; good old Kentucky — with which 
is linked the fame of Daniel Boone, and a Civil War record 
of which it may well be proud. 

We in the North, of course, all know that Kentucky is 
famous for its beautiful women, its handsome men, its splen- 
did race horses of the great blue grass region, and the whiskey 
of which Colonel Watterson has told us so much and claims 
to be so fine a judge. His story of " Old Kentucky Bour- 
bon " is a dream of eloquence. 

But first of all to engage our attention are the women, 
whose beauty is only eclipsed by their charm of manner, 
their refinement and bright intelligence. They represent an 
aristocracy of the best blood of the American people, and I can 
testify to their fascinations, for I won, or rather surrendered 
to, one of the finest of Kentucky's daughters, after for a long 
time supposing that my surrender was impossible even to the 
fairest of the fair ; and therefore I am glad to come to Ken- 
tucky and to enjoy the privilege of addressing so many of its 
stalwart sons as are gathered in this distinguished assembly 
of Kentucky bankers, on the general situation, after the finan- 
cial storm we have passed through. I indeed almost feel, in 
the tender words of the popular song, that I have at length 
reached " My Old Kentucky Home." 

As a border State, you are claimed by both the South and 
the North, and your hospitality makes visitors from every 
quarter believe that, no matter where they hail from, Ken- 
tucky knows no North, no South, no East, no West, in the 
welcome she extends to strangers, or friends, from every 
sister State. When, in after life, these visitors sing the 
old song, " There's no place like home," they will mentally 
add, " except Kentucky." 

I thank God that to-day we all know the United States as a 
United Country now and forever, which during the present 
generation has grown, and is growing, more united, more 
liberal, in a broader sense, and each section more just and 



912 THE FINANCIAL SITUATION. 

generous in seeking to solve the problem of granting equal 
rights to rich and poor alike. 

In closing I desire to impress upon you that I shall always 
have in my heart a grateful appreciation of your kindness 
and courtesy in permitting me to meet and address you on 
this occasion. 

At the close of this Address a motion was made that " Mr. 
Clews be tendered a vote of thanks by the members of the 
Convention for his very able, very interesting, and most 
instructive address." 

The President of the Association — who presided — said, 
" Those in favor of the motion will please rise." He then 
declared the vote to be unanimous. 



CHAPTER LXXIX. 

Table Showing Dates of Admission of the Members of the 

NEW YORK STOCK EXCHANGE. 

According to the Directory Issued July 1, 1907. 



Prior to May 3, 1869, the New York Stock Exchange was 
a body with a membership of 533. Of such original mem- 
bership, there are now remaining 31, as appears by the fol- 
lowing list, such list giving the date of their admission: 

1844 — Dec. 17 — Wm. Alexander Smith. 

1857 — Nov. 20 — J. H. Whitehouse. 

1858 — Mar. 6 — L. D. Huntington. 

1862— May 10— A. M. Cahoone. 

1863— June 6— E. C. Benedict. 

Aug. 10 — J. H. Jacquelin. 

Sept. 4 — H. S. Camblos. 

1864 — June 27 — Henry Clews. 

July 6 — E. S. Connor. 

July 8 — E. H. Bonner. 

Dec. 12— H. S. Wilson. 

Dec. 30— F. W. Gilley. 

1865 — Jan. 11 — Joseph Walker. 

Feb. 28— Jas. Weeks. 

Dec. 2 — R. Suydam Grant. 



914 NEW YORK STOCK EXCHANGE MEMBERS. 

1866— Feb. 17— Donald Mackay. 

Mar. 24 — A. I. Ormsbee. 

May 2 — Francis L. Ames. 

Sept. 7 — D. Henry Smith. 

Dec. 8— W. T. Colbron. 
1867— June 15— G. J. Losea. 
1868— Mar. 27— T. W. Thorne. 

May 26 — H. S. Germond. 

June 8 — Chas. Gregory. 

July 24 — Jas. D. Smith. 

Dec. 28— C. H. Leland. 
1869— Jan. 9— A. H. Combs. 

Jan. 12 — F. K. Sturgis. 

Feb. 24— A. M. Judson. 

Feb. 26— W. G. Read. 

Mar. 18— W. E. Tillinghast. 

On May 3, 1869, a separate body of brokers, known as 
the " Government Bond Department," was admitted, upon 
the payment of $1,000 each. This board has a membership, 
as admitted, of 173, and of such members there now remain 
15, as appears by the following list: 

W. L. Bull. Salem T. Russell. 

E. A. De Mauriac. R. K. White. 

R. P. Lounsbery. Chas. S. Day. 

William Rasmus. Cyrus J. Lawrence. 

Jas. Seligman. Alfred Eeilson. 

C. A. Buttrick. Chas. M. Schott. 

Louis P. Henop. W. B. Wadsworth. 
J. R. Maxwell. 

Between the 3d and 8th day of May, 1869, various mem- 
bers were elected, of whom one now remains, Mr. F. Nathan, 
who was admitted to membership on May 6, 1869. 



NEW YORK STOCK EXCHANGE MEMBERS. 915 

On May 8, 1869, a consolidation was effected with an 
organization known as the " Open Board of Brokers/' at 
that time facetiously referred to as the " Coal-holers," from 
the fact that they had held their meetings for a time in a 
basement in William Street. 

This Open Board had a membership of 354, of whom 
there remain as members at the present time but 26, as 
appears by the following list: 

L. D. Alexander. P. H. Minis. 

S. L. Blood. Oswin O'Brien. 

M. Burr, Jr. S. M. Schaffer. 

W. B. Dickerman. W. G. Wiley. 

H. H. Hollister. W. F. Bishop. 

W. B. Lawrence. John V. Bouvier. 

J. E. Mastin. G. F. Cummings. 

W. B. Sancton. Albert T. Hatch. 

J. M. Armory. A. Josephson. 

John S. Bussing. W. B. Lockwood. 

L. G. Fisher. H. J. Morse. 

W. H. Johnson. E. L. Oppenheim. 

A. Libaire. A. H. Vernam. 

Of members admitted during the balance of the year 1869, 
that is, from May 8th until the close, there remain at present 
7, as appears by the following list, which gives the date of 
admission in each case: 

S. W. Boocock, June 2d. John Bianchi, June 26th. 

D. B. Van Emburg, June 19th. Jas. B. Wilson, Oct. 5th. 
M. C. Bouvier, June 25th. W. S. Gurnee, Nov. 30th. 
Henry G. Campbell, Dec. 2d. 

As the result of the admissions of the two bodies heretofore 
described, the membership of the Exchange rose to a total 



916 NEW YORK STOCK EXCHANGE MEMBERS. 

of 1,060, at which figure it stood until December, 1879, on 
which date, in order to raise funds for the construction 
of a new building, there were sold at auction forty addi- 
tional memberships, which brought an average of about 
$15,000 each. Of these seats so purchased there now re- 
main 9. 

This brought the total membership to 1,100, at which 
figure it has ever since remained. It appears, therefore, 
that of members who joined the Exchange prior to the 1st 
of January, 1870, there at present remain 85, as follows: 

Members of the original " New York Stock Exchange " 

now remaining 31 

Members of the " Government Bond Department " who 

joined May 3, 1869 15 

One member who joined the Exchange May 6, 1869. . 1 
Members of the " Open Board of Brokers " who were 

admitted May 8, 1869 26 

Present members who joined between May 9, 1869 and 

Jan. 1, 1870 7 



80 



CHAPTER LXXX. 

ENGLAND AND RUSSIA IN OUR CIVIL WAR AND THE 
WAR BETWEEN RUSSIA AND JAPAN.* 

THERE has recently been much discussion relative to 
the attitude of England and Russia towards the United 
States during our Civil War. This was provoked by the war 
between Russia and Japan, which caused the partisans of 
Russia here to contend that Americans ought to sympathize 
with Russia in the contest. They argued that Americans 
should do this because Japan has an alliance by treaty with 
England, and English sentiment was a good deal against the 
United States in our struggle, or rather in favor of the South 
as against the Korth, whereas Russia was on our side, and 
made us, in 1863, as they erroneously claim, an offer of naval 
assistance in the event of intervention by England and 
France. 

It is very easy to assert, as it has long been asserted and by 
many believed, that Russia, in 1863, offered the United 
States Government the use of her ships of war that then 
came to the port of New York, and that this prevented, or 
may have prevented, England and France from recognizing 
the independence of the Southern Confederacy. But we have 
yet to learn that there is any record of such an official over- 
ture by Russia, either at St. Petersburg or at Washington; 
and there certainly would be one in both countries if the 
assertion was a fact instead of being wholly mythical. 

Would Lincoln or Seward have left the country in igno- 

* Written for the North American Review, June 1904 issue, by Henry 
Clews. 



318 ENGLAND AND RUSSIA IN OUR CIVIL WAR. 

ranee of such an affair, or of any suggestion in that direction, 
if it had been officially made ? It is a myth that hardly calls 
for contradiction. Such matters between nations cannot be 
kept secret, and the lapse of forty years since 1863 without 
revealing anything concerning the alleged orders, goes to 
prove that there were none of the kind, and that there was 
nothing to reveal. The Russian ships came here in 1863, just 
as the Russian fleet with the Grand-Duke Alexis came to 
New York in 1871, merely on a cruise. 

That sentiment in England during the war was largely pro- 
Southern among the wealthy mercantile and manufacturing 
class is not to be disputed. But this resulted from the inter- 
ruption of the cotton supply by the war and the blockade of 
the Southern ports, and from the loss of the South as a cus- 
tomer for British manufactures, involving much depression 
and distress. The shoe pinched very severely. Liverpool and 
Manchester, in particular, were great sufferers by the war, 
and smarted under the extinction, for the time being, of 
their Southern cotton supply and connections, and they were 
against the North largely because it had choked off this 
trade.* 

But this sentiment, this irritation, due to business condi- 
tions growing out of the war, was merely personal, and in no 
way involved the British Government, or reflected its lean- 
ings, opinions, or future policy. Liverpool and Manchester 
were, not unnaturally, sentimentally against the North, be- 
cause it was, under the necessities of war, preventing the 
South from shipping its produce to England or importing 
British goods. That feeling of irritability against the North 
would have disappeared at any time with the resumption of 

* I except, of course, the great excitement and commotion created in 
England by the seizure of Mason and Slidell, on November 7th, 1861, by- 
Captain Wilkes of the U. S. S. " San Jacinto," when the British Government 
demanded their release and an apology; but that was because we had 
violated the rights of a neutral vessel by taking them from the "Trent," 
flying a British flag. We released them on that ground, and so at once 
ended the trouble that had threatened war. This was a special case of 
our provoking. 



Gladstone's letter to henry clews. 919 

trade with the South ; and it did disappear as soon as the war 
ended and the Southern ports were reopened to commerce. 

England's American trade up to that time had been very 
much larger with the South than with the North, for cotton 
was much more truly " king " then than it is now ; and, apart 
from grain and provisions, the export trade of the North was 
very small in comparison with its present great extent. 
Moreover, the wealth of the United States was small in pro- 
portion, and our social relations with England and the rest 
of Europe were not nearly as intimate and extensive as they 
have since become. We have learned to know each other 
much better in the interval. 

We had not then begun to export beauty and fashion, 
largely in the shape of American heiresses, for the delight 
and enrichment of the aristocracy of the Old World, and we 
could boast of no such colossal individual fortunes as we can 
now. 

When, however, the British Government did, on one occa- 
sion, consider the question of recognition of the South and 
intervention in the war, it was solely on the proposition of 
the French Emperor, Napoleon the Third, who wanted to 
break up our Union in order to promote his scheme for plant- 
ing the Latin race in America, by establishing, under French 
protection, an empire in Mexico, with Maximilian on the 
throne. But his proposition was at once unanimously, em- 
phatically and unconditionally rejected by the British 
Cabinet. 

We have this on the highest official authority, that of Mr. 
Gladstone himself, who, in a letter to me dated May 30th, 
1889, speaks thus positively on the subject: 

26 James's Street, May 30, 1889. 
Dear Sir: 

Having expressed my interest in the portions of your work which I read 
on the day of its arrival, I think it would be less than ingenuous if I did not, 
after reading what relates to the Cabinet of Lord Palmerston, on page 56 
and in the following chapter, make some reference to it. 

Allow me to assure you that, so far as that Cabinet is concerned, you have 



920 ENGLAND AND RUSSIA IN OUR CIVIL WAR. 

been entirely misled in regard to matters of fact. As a member of it, and 
now nearly its sole surviving member, I can state that it never at any time 
dealt with the subject of recognizing the Southern States in your great 
civil war, excepting when it learned that proposition of the Emperor Napo- 
leon Third, and declined to entertain that proposition without qualification, 
hesitation, delay, or dissent. 

In the debate which took place on Mr. Roebuck's proposal for the nego- 
tiation, Lord Russell took no part, and could take none, as he was a member 
of the House of Lords. I spoke for the Cabinet. 

You will, T am sure, be glad to learn that there is no foundation for a 
charge which, had it been true, might have aided in keeping alive angry sen- 
timents happily gone by. You are, of course, at liberty to publish this 
letter. 

I remain, dear sir, your very faithful servant, 

W. E. GLADSTONE. 

Henry Clews, Esq. 



In this letter it will be seen, Mr. Gladstone, the Grand Old 
Man, as England called him, a member of the British Cabinet 
during Lord Palmerston's administration, which extended 
from 1859 to 1865, more than covering the period of the war 
for the Union, assured me that the Cabinet never at any 
time dealt with the subject of recognizing the Southern 
States, except to decline to entertain the proposition of 
France, and this " without qualification, hesitation, delay, or 
dissent." 

What could be more positive and emphatic than this ? 
What more unequivocal, explicit and direct? It is an un- 
qualified statement that the British Government had never 
during the war in any way considered the question of recog- 
nizing the Southern Confederacy, except on that one occa- 
sion, and England was the first nation to which the French 
proposal was made. Had England joined France when 
Napoleon made his proposition, which she was the first to re- 
ject, that conspirator against us would have tried hard to help 
the South to succeed in disrupting the Union, for the purpose 
of regaining possession of Louisiana, and capturing as much 
additional territory as possible in order to annex it to the 
empire he expected to found in Mexico. He wanted a weak 




WILLIAM E. GLADSTONE 



THE RUSSIAN CRUISERS IN AMERICA. 921 

neighbor. We were saved from his machinations, and this 
great danger, by the resolute course of the British Govern- 
ment ; and Napoleon thereafter sowed the wind to reap the 
whirlwind in Mexico. He consigned poor Maximilian to 
disaster and an inglorious death, after his empire had fallen 
like a house of cards when the French troops, that had bol- 
stered up his throne, were withdrawn. 

This positive testimony from so high and competent an 
authority as Mr. Gladstone ought to be conclusive in effect- 
ually disproving the unfounded " cock and bull " story that 
England, at one time, contemplated the recognition of the 
Southern Confederacy, and that she was prevented from 
moving in that direction, and led to reverse her policy, and 
prevent the escape of the Confederate cruisers from Laird's 
shipyard at Birkenhead, by the arrival at New York of Rus- 
sian war-ships. 

The fact that a Russian squadron, commanded by Admiral 
S. Lessoffsky on his flagship " Alexander Nevsky," did come 
to New York late in September, 1863, and that its officers 
were very hospitably received and entertained, is the peg on 
which this story is made to hang. I have good reasons for 
saying the ships came here with no such object, nor with 
" sealed orders " to take an active part in the war, if required. 
New York was merely a port of call for them, and no doubt 
their officers were glad to get here and be feted, as they were. 
They also, it is safe to assume, appreciated the courtesy of 
William H. Seward, the Secretary of State, who afterwards 
told me that, when he heard of their arrival in American 
waters, he invited them to accept the hospitalities of the port 
of New York. He, of course, foresaw that their coming here 
would, or at least might, have a good moral and political 
effect in our favor both at home and abroad, by depressing 
the South and encouraging the North, and causing any for- 
eign Powers that might have been considering the advisa- 
bility of recognizing the Southern Confederacy to postpone 
action under the impression that we had, or might have, 
Russia for an ally. 



922 ENGLAND AND RUSSIA IN OUR CIVIL WAR. 

He was astute enough to see that this visit of the Russian 
squadron might seem to be what it was not, particularly to 
foreign eyes. Appearances, we all know, are often deceptive, 
yet they sometimes exert great influence. The visit of this 
squadron was a case in point. It was a splendid " bluff," at 
a very critical period in our history. Its coming was all the 
more desired by Mr. Seward because, on the 3d of February, 
1863, he had received a despatch from the Emperor Napoleon 
offering to mediate between the United States and, the South- 
ern Confederacy, to which he replied three days later, 
absolutely rejecting the offer, in very positive terms. After 
that, early in July, the battle of Gettysburg had been fought, 
and Northern prospects had brightened very materially. 
Nevertheless, the coincidence of an arrival, about the same 
time as the Atlantic Squadron came, of more Russian war- 
ships at San Francisco, under the command of Admiral 
Popoff, added to Secretary Seward's gratification ; and, when 
the Russian officers of the Atlantic Squadron went on to 
Washington, he kept up the festivities to which they had been 
accustomed in New York by giving them a grand dinner. He 
was a fitting host, as he had originally invited them to come 
here. 

The Grand-Duke Alexis when he came to New York, with 
another Russian squadron, under another Admiral, in 1871, 
practically verified, in reply to my inquiries in conversation 
while I was acting as one of the Russian Reception Commit- 
tee, what Secretary Seward had previously intimated to me 
— namely, that there was no foundation for the story that the 
Russian squadron of 1863 had come here to help us in war- 
fare, if needed. Mr. Seward told me this very definitely on 
one occasion when I met him at Washington. But that its 
officers enjoyed themselves here very much socially was 
evident from their profuse expression of thanks, and acknowl- 
edgment of obligations for the favors received, before they 
took their departure, and also from the fact that when they 
got back to Russia, they called in a body, with the Emperor's 
approval, on Mr. Cassius M. Clay, the American Minister at 







J Uu^ d*utt fl***A- .1*- ttWlsu Cist 



iUOLW. ^^ ^^ " %^/^<^U- 






tpiA** l**yju*1<t<^ 



*T' (UCU/J ^^ 




THE RUSSIAN SHIPS HAD NO MISSION. 923 

St. Petersburg, to return thanks more formally for the cour- 
tesies and kindness of which they had been the recipients here. 

ISTow, it is clearly to be inferred that, if they had come here 
to serve us at a grave crisis, by offering to take part in our 
war, they would not have felt themselves under such obliga- 
tions to us ; on the contrary, we should have been under very 
great obligations to them, which would have called for public 
acknowledgment. Moreover, if the Russians had come on 
any such mission as naval co-operation in actual war, if 
needed, it would not only have been a matter of official record 
in both countries, but it would have immediately become 
known, not alone to the public here, but to the world. It 
would have been simply impossible to keep the news from the 
press; and the Government at Washington would have had 
no object; no good purpose to serve, in concealing such an 
alliance, for alliance it would have been of great international 
importance, and one which would have tended, still more 
than the activity of our own navy, to show Europe and the 
South the hopelessness of the South's struggle with the North. 
Russia was friendly to the United States, of course ; but this 
friendship between the two countries was very different from 
an offer, or a willingness, to help us by armed intervention 
in our favor. Russia has never intimated that she had any 
such intention; and, indeed, such intervention on her part 
would have been folly, as her navy was then very small after 
the destruction of the Crimean War, and would have been 
powerless against England or Erance. 

The conclusion is, therefore, that the sympathy with 
Russia in its present war with Japan, which many in the 
United States are endeavoring to stimulate on the strength of 
this Munchausen story of proffered war-ships, is based on a 
mere assumption. Just as in the case of one of Dickens's 
characters, " Mrs. Harris," there was " no such person," so 
in the case of this visit of Russian cruisers, there was no such 
offer of these by Russia to the United States, nor any evi- 
dence of any intention to offer them by Russia. On the 
contrary, Prince Gortchakoff, the Russian Minister of For- 



924 ENGLAND AND RUSSIA IN OUR CIVIL WAR. 

eign Affairs, repeatedly said to our Minister at St. Peters- 
burg and in despatches to the Russian Minister at Wash- 
ington, that Russia greatly favored peace, and wished for 
its speedy return; but would never take sides in the con- 
troversy between North and South. 

Finally, as to England, we have the word of William 
Ewart Gladstone that the British Government was not un- 
friendly to us throughout our Civil War, inasmuch as it was 
absolutely and entirely opposed to the recognition of the 
Southern Confederacy, and instantly and effectually check- 
mated the French Emperor when he tried to make it swerve 
from its consistent course of neutrality. Had the British 
Government been unfriendly, it would have jumped at this 
chance to join France in recognition and intervention. 
" By their fruits ye shall know them." 

There is no reason in what I have said, however, for an 
anti-Russian and pro-Japanese feeling in the United States, 
or an anti-American feeling in Russia ; and it is much to be 
desired that friendly feeling towards each other should pre- 
vail in both countries, but not at the expense of truth. Even 
Japan, while fighting Russia, is showing good-will and gen- 
erosity towards Russian officers and men, and treating them 
with uncommon courtesy and consideration. 

My only object in thus writing is to present the matters 
referred to, involving the relations of the United States with 
England, France and Russia during our Civil War, in a true 
and proper light, and so to correct prevailing misapprehen- 
sions. Russia's course in Manchuria, however, by which she 
tightened, instead of releasing, her grip upon it, as she prom- 
ised to do, sufficiently accounts for our lack of sympathy with 
her in her war with Japan. 

While professing friendship for the United States, she has 
acted in bad faith, and by her restrictions ruined our growing 
trade there ; and all the specious arguments put forward by 
Russia through the Russian Ambassador at Washington will 
not make the American people believe that Russian success 
in this war would be an advantage to the United States. 



AMERICAN SYMPATHY WITH JAPAN. 925 

Hence, American sympathies are not generally on the side 
of autocratic and grasping Russia, with its closed door, but 
with liberal Japan, and its open door. Moreover, it is to be 
hoped that Russia will find her so-called " special position " 
of exclusiveness and monopoly in Manchuria untenable, and 
be compelled to abandon it, to evacuate that country, and 
leave its trade open to all the world. Then the now idle and 
ruined factories, built there by Americans, could be turned 
to profitable account again. 

Although our relations with Russia have always been 
friendly, past friendship does not justify present injustice. 
The retention of her foothold in Manchuria, which she was 
to have held only until the country was pacified, and her 
obvious and avowed designs upon Corea, evidently aim at the 
acquisition of their territory, and point to similar ultimate 
designs upon China and Japan. 

Such being the case, we may well sympathize with Japan 
in her struggle with Russia. We owe nothing to Russia be- 
cause some of her ships came to New York in 1863 ; but we 
are indebted to England for having peremptorily declined 
the proposition of France to recognize the Southern Con- 
federacy. 

Moreover, England is our natural ally, as we are allied 
to her by an affinity of race, language, religion and free in- 
stitutions. As for " the Yellow Peril," of which so much has 
been said, especially by the Russian Ambassador, as some- 
thing to be feared by the Western nations, it is purely 
imaginary and chimerical. There is no more danger of 
China and Japan, if successful in war at home, invading and 
overrunning the rest of the world at any time in the future, 
near or remote, than there is of the man in the moon com- 
ing down and invading us with an army of moonshiners. 

Editor New York Times, New York City. August llth ' 1905 - 

Dear Sir: My attention has been called to an editorial in your issue of 
August 10th, entitled "That Gladstone Letter Again," the letter in question 
being the one received by me personally from Mr. Gladstone. The editorial 



926 ENGLAND AND RUSSIA IN OUR CIVIL WAR. 

by its wording seems to bring in question the authenticity and veracity of 
the statements contained therein. 

The letter came to me voluntarily from Mr. Gladstone, as the result of an 
article written by me, and it should remove any doubt as to the position of 
the British Cabinet in comiection with our Civil War. The utterances of 
some of the individual members of the Cabinet did doubtless favor the 
South during a part of our Civil War, but when Emperor Napoleon's propo- 
sition for intervention came up in the British Cabinet, the action taken was 
exactly as Mr. Gladstone states in his letter to me, and is borne out by Mr. 
Gladstone's speech in the House of Commons made soon afterwards, and 
it was largely due to his speech that Mr. Roebuck's motion on Napoleon's 
proposition was defeated. 

There is an unwritten law in England that the deliberations of the British 
Cabinet shall never be revealed by any member except by consent of the 
Crown. Mr. Gladstone was known to be a great stickler for conventions, 
and his letter to me in which he expressly says I am at liberty to publish it 
could not have been written except by consent of Queen Victoria. 

Very truly yours, 

HENRY CLEWS. 



CHAPTEK LX5XI. 

. THE CRISIS OF 1907 AND ITS CAUSES. WAS 
PRESIDENT ROOSEVELT TO BLAME?* 

IT gives me great pleasure to meet the members of the 
Chamber of Commerce of the city of Cleveland. 

Next to New York — being from New York I have to 
make this distinction — next to New York, I consider Cleve- 
land the home of the most worthy set of business men in 
the United States. Your forefathers chose well when they 
elected to settle in this beautiful spot. The wisdom which 
they displayed is proven by the twenty miles of docks on 
your water front and by the fact that your people own the 
largest tonnage on the lakes. 

The natural resources of your surroundings have made 
you masters of trade in coal, iron, and petroleum. Your 
harbors are commodious, and what they lacked in natural 
formation you have supplied by the famous breakwaters 
which have been built. Your city is not only a natural busi- 
ness center, but also a railroad center. 

Your Euclid Avenue is spoken of in the East as a model 
to be copied by the lovers of beauty. 

Fifty years ago Cleveland was a village. If you continue 
to thrive as you have, where will you be fifty years hence ? 

It was in the soil' of Cleveland that the seed was planted 
that has grown and developed into the greatest business 
plant in the world. To-day the Standard Oil Company com- 
mands trade in every country on the face of the globe, and 

* An address to the Cleveland Chamber of Commerce, Cleveland, Ohio, 
Tuesday evening, January 28th, 1908, by Henry Clews. 



928 THE CRISIS OF I907 AND ITS CAUSES. 

as a body are the greatest merchants that the world has ever 
known. 

Ohio has robbed Virginia of the right to be known as 
" the mother of Presidents/' and I predict that the Repub- 
lican Convention to be held this summer will present as its 
candidate your most famous and honored citizen, Hon. 
William H. Taft, who will be elected by an overwhelming 
majority. I suggest that he and Mr. Roosevelt change places 
— Taft as President and Roosevelt as Secretary of War, or 
still better, Secretary of the Navy. Then we will be ever 
alertful and prepared for eventualities both on our Atlantic 
and Pacific coasts. In this way we will retain the services 
of both. 

I will begin by saying that the elimination of the Godly 
Motto on our gold coin many people may think means — " In 
President Roosevelt we trust, but in God we distrust " ; but 
I am sure the great mass of the Americans do not think 
that way. They believe in trusting both God and the Presi- 
dent, and if the President will put back " God " on the 
American coin they will put him back in the White House 
after his present term — thus making our Motto: God first, 
our Country second, Theodore Roosevelt third (term). The 
Three together one and inseparable for the next four years. 

It is my belief that there is not an intelligent man in the 
United States who sincerely questions the " honesty of Theo- 
dore Roosevelt's motives." Whatever he has done he has 
done to promote the public good and the nation's welfare, 
whether his speeches have helped to cause distrust or not. 
He is an honest man, and an honest man is said to be the 
noblest work of God. But, of course, as we cannot expect 
perfection even in honest men, they may sometimes make 
mistakes in their judgment of consequences, however good 
their intentions are. That we all allow for. 

You ask the question: Is President Roosevelt's policy 
towards capital sound ? In other words, has he, in de- 
nouncing and instigating the prosecution of law-breaking 
railway corporations, and industrial Trusts, menaced the 



THE CRISIS OF I907 AND ITS CAUSES. 929 

prosperity of the country ? I contend that he has not. He 
certainly had no intention to do so, for, while he was instru- 
mental in turning on the light, he was not responsible for the 
abuses of power that the light revealed, and it is the revela- 
tion of graft and illegal methods, on the part of certain 
railway and other corporations, through the acts of their 
responsible managers, and controlling capitalists, that has 
undermined public confidence in many of them. 

It is true that the marked change in conditions and pub- 
lic sentiment, especially in the stock market, — from the great 
optimism, buoyancy and high prices of last year to the great 
depression and low prices of this year of panics, — has caused 
many unthinking critics of the situation to ascribe it to 
the influence of President Eoosevelt. The speculative cap- 
italists and Trust magnates who have lost heavily by the 
depression in stocks have this impression of the effect of 
his policy and speeches in exposing corporate wrong-doing. 

But it is an idea that needs to be controverted, or at least 
is open to question, and his course is generally approved by 
popular opinion all over the country. In other words the 
people generally are in favor of the policy represented by 
all that the President has done to correct corporate abuses 
and illegal methods and raise the standard of business 
morality. 

Before entering further into the subject, however, I will 
say that gatherings of this kind, where the burning ques- 
tions of the day are discussed in a frank and friendly way, 
are productive of good fellowship, and good results. Differ- 
ent minds view important events from different standpoints, 
and any association that meets for this purpose with a desire 
to obtain by mutual discussion, the fairest and best under- 
standing relating to public measures, is doing a patriotic ser- 
vice, and is worthy of the highest commendation. It is par- 
ticularly so at a time like this, in view of the prevailing 
depression and distrust. 

It is very fortunate that a presidential election did not 
take place last year, as the people were in such a state of un- 



930 THE CRISIS OF I907 AND ITS CAUSES. 

certainty and apprehension that many well-meaning men 
would not, I fear, have voted with a desire for their country's 
good, but be biased by personal interest or a determination 
to obtain revenge for what they have lost by the great and 
prolonged decline in the stock market and the disturbance of 
credits. 

It is, of course, greatly to be deplored that some of the 
men high in command in the industrial and railroad com- 
panies have abused the trust reposed in them and made it 
imperative for the President to instruct the attorneys of the 
national government to investigate their doings, and prose- 
cute those corporations and their officers charged with using 
their corporate powers to do illegal acts, like rebating, and 
such chicanery as that of the Chicago & Alton reorganiza- 
tion. The fact that, in nearly every such instance of Gov- 
ernment prosecution, the guilt of the parties accused has been 
proved on their trial, justifies President Eoosevelt in his 
action. 

While capital may continue timid until the whole truth is 
known and confidence in corporate management restored, the 
agitation, will, in the end, prove beneficial to the country ; for 
it will purify it by eliminating the unlawful evils complained 
of. This will inspire foreign capitalists as well as our own 
with confidence; and they will invest heavily in American 
securities, just as soon as they feel assured that the surplus 
earnings of our railway and industrial companies will be 
fairly divided among the stockholders under honest manage- 
ment, regulated by law, and subject to Federal and State 
supervision. 

Recent events have shown that drastic action was necessary 
to insure a square deal for all. Mr. Roosevelt is not attack- 
ing capital, but he is attacking those in control of corpora- 
tions who have misused their power and position to do illegal 
acts and presumably for their personal profit. Confidence 
received blow after blow from this source, before getting 
another rude shock through the exposures resulting from the 
Metropolitan Securities investigation, and the action of the 



THE CRISIS OF I907 AND ITS CAUSES. 931 

New York Clearing House with regard to the Heinze and 
Morse banks. 

It is now over two years since public disclosures of this 
kind as well as of railway rebating began, followed by the 
collapse of the copper manipulation and, very recently, by 
the scandals connected with the New York Traction situa- 
tion. No wonder, therefore, that confidence is seriously dis- 
turbed. And who is responsible? Not President Roosevelt 
and Mr. Hughes, the famous life insurance investigator, who 
have been instruments of exposure, but the individuals who 
conceived and conducted these unlawful operations. Of 
course the guilty protest against financial house cleaning; 
and they endeavor to ward off official investigations on the 
plea that these disturb confidence, and make the innocent 
suffer. But the whole responsibility should be placed where 
it belongs — upon the perpetrators of misdeeds, and not upon 
those who, in the discharge of the duties of their high office, 
have been the means of turning on the light and preventing 
future operations of the kind. Those who have trifled with 
the public interest, and displayed a blind disregard of the 
people's rights, are the real transgressors. 

It becomes daily more evident that when all our railway 
and industrial corporations are known to be honestly man- 
aged, and when stockholders and investors get their due, 
values will be more stable, and American credit, which is 
now at a low ebb in all the great financial centers of the 
world, will be restored to its rightful place. 

Throughout all these disclosures of illegal methods and 
wholesale graft there is one gleam of encouragement, and 
that is, that public opinion is aroused and will insist upon 
clean as well as capable corporate management in the future, 
and thus these disclosures will result in the raising of the 
moral standard of corporate management. Meanwhile, the 
public is disturbed by these revelations, and wonders what 
financial irregularity will be brought to light next. The ac- 
tion of many corporate managers has seemed to indicate 
that they think little of violating the laws, and that, if they 



932 THE CRISIS OF I907 AND ITS CAUSES. 

are broken by one high in authority, or in social life, im- 
munity must be granted; or some subordinate be made to 
suffer instead of themselves. If a poor man commits a crime, 
he is sent to jail. Sympathy for his family may sometimes 
make the judge lenient as to the time of his incarceration, 
but, however short the term, it generally brings sorrow and 
want to the family for which he is the sole provider. Thus, 
the innocent have to suffer with the guilty in such cases. 

In corporate matters, if a manager or controlling capitalist 
breaks the law, justice should punish him, as it would anyone 
else. The law should be no respecter of persons. 

Sodom and Gomorrah were destroyed because the people 
broke Nature's laws ; and this government, although the best 
known to man, would be destroyed in the course of time, if 
the rich and unscrupulous were permitted to break the laws 
with impunity, while the poor were punished for much less 
serious offenses. This invidious distinction has caused those 
who have suffered by the corrupt and illegal practices of 
corporations and their managers to unload their grievances 
upon the President. In their communications they tell him 
that, while many from their ranks are being sent to prison, 
they fail to. see any of the rich being sent there, although the 
evidence against them is unquestionable. This unjust dis- 
tinction, if it continues, I repeat, cannot fail to have an un- 
settling effect upon the American people, and may finally 
result in. something more, as this is a government of the 
people, for the people and by the people, and a discrimination 
in favor of the wealthy — whether corporations or individuals 
— will not be very long permitted by the plain people, who 
are largely in the majority. 

President Eoosevelt took the oath at his inauguration to 
be guided by the Constitution, and as the Constitution re- 
quires that the Executive of the nation shall enforce the laws, 
he would have been derelict in his duty and unfaithful to 
his oath if he had not taken the action he has, to compel 
corporations to conform to the Interstate Commerce and 
Sherman Anti-Trust • laws and their amendments. When- 



THE CRISIS OF I907 AND ITS CAUSES. 933 

ever evidence has reached him, through the complaints of 
people who have suffered in consequence of the violation of 
these laws, he has very properly handed the material received 
over to the Attorney General to make the necessary investi- 
gation, and as in every case thus prosecuted the results have 
justified all he has done as to these, he deserves great credit. 
The so-called indiscriminate attacks that are claimed to have 
heen made hy him upon corporations and business interests 
have no sound basis. So far as his intentions go, he has only 
attacked dishonesty and law-breaking. While I fully ap- 
prove of what Mr. Roosevelt has done in the way of reform, 
I confess I do not fully approve of his too oft repeated pas- 
sionate utterances on the subject during the recent period of 
distrust. It undoubtedly has helped to unsettle the minds of 
timid investors and weak-minded depositors. The President 
has probably been a little too outspoken at a time when silence 
would have been golden. There are periods when the least 
said the better; still, I applaud his good intentions and his 
excellent deeds, which cannot fail to prove fruitful in the 
end. We should all be willing, therefore, to overlook his 
recent volubility and frequent reiterations. 

A short time ago France stood ready to invest large sums 
in American bonds and stocks. But just after her first ven- 
ture in Pennsylvania Railroad bonds our corporation scan- 
dals filled the air with their unpleasant odor and French 
capital was locked at once against everything American. 

When all the old evils have been exposed, and wrongs 
righted, and foreign as well as home investors again seek 
investments for their funds in our securities, we may rest 
assured that, having undergone rigid investigation, they will 
be looked upon as the best in the world. 

That President Roosevelt should be blamed in any way 
for the banking troubles, business failures and losses that 
have been made in the stock market is unfair ; but it is always 
the case that the Executive in office bears the brunt of what- 
ever disasters of the kind occur during his administration. 

Those of us whose hair is no longer black, brown, sandy 



934 THE CRISIS OF I907 AND ITS CAUSES. 

or red, — or very abundant, — can well remember the calumny 
and evil reports that were heaped upon the broad shoulders 
of the well beloved Abraham Lincoln. The noble cause 
he fought for cost millions of lives and billions of dollars, 
and of course there were very many who suffered at that time 
by the war. Of these many were most bitter in their de- 
nunciation of President Lincoln, and this nearly broke the 
heart of that great man, but did not for a moment cause him 
to desist in the work he saw it was his duty to perform to 
the end. To-day, those who traduced him join freely with 
the whole nation in doing honor to his memory. President 
Roosevelt may be severe in the frankness with which he re- 
iterates his intention to punish those who break the law ; but, 
in the distant future, the world at large will remember him 
as one who dared to suffer under unjust denunciation for 
the sake of right, and even now the great mass of the people 
are with him in his efforts to improve and purify business 
conditions. 

Those capitalists who have lost money largely by this 
year's decline in prices of stocks, and the monetary disturb- 
ance, are naturally bitter and resentful; but even the ma- 
jority of such, down in their hearts, grant that in principle 
President Roosevelt is doing his plain duty, though in his 
speeches he may have said too much too often. If what he 
has done is wrong, it is the fault of the law, for he has urged 
no greater punishment than the enforcement of the law. But 
the man would be daring, indeed, in the face of the exposures 
already noted, who would presume to say that the law is 
unjust. It aims at equal justice for all, and we are a law 
abiding people. 

In view of all the wrong doing in corporation management 
it must not, however, be forgotten that the majority of our 
corporations are ably and honestly managed in the interest 
of the stockholders. It is not surprising that black sheep 
have crept into some of them, for a certain percentage of 
people in every walk of life and every association, church 
or social club, are bad at heart, and show up in their true 



THE CRISIS OF I907 AND ITS CAUSES. 935 

colors, when subjected to the temptation to commit wrongs 
which will tend to their personal advantage. The assump- 
tion that now prevails, that all corporation management is 
dishonest, is, therefore, unjust and has been causing much 
of the hysteria that has prevailed in Wall Street and else- 
where. 

To protect minority stockholders, especially in the Inter- 
state Railroads, they should have at least one representative 
in the board of directors, and he should be elected by the 
minority at each annual meeting. If such a director was a 
cool-headed, honest business man, certain abuses, which have 
been prevalent in the past, could not have occurred and 
would be prevented in the future. 

It is much to be regretted that to aid personal schemes, 
some of the men in power, even in some of our large National 
Banks, have resorted to methods which have caused loss of 
confidence in them, which resulted in their retirement, prac- 
tically under compulsion, as officers and directors. It is 
almost needless to say that, of all corporations, our National 
Banks should be the last to be used for illegal purposes, or 
to promote personal gain or speculations. 

When a man in power imperils the solvency and good 
reputation of one of our banks, he is a public enemy, and 
as mean and guilty as one who attacks the virtue of a vir- 
tuous woman. To destroy confidence in that woman and her 
good name is to do her an irreparable wrong. Destroy con- 
fidence in a bank and you destroy that which is one of the 
corner-stones of business prosperity. Those who invest in 
railroad stocks, or stocks of Industrial corporations, risk only 
the cost of their investment, but the holder of record of a 
National Bank stock is liable for an additional amount equal 
to the par value of his holdings. 

Publicity is the greatest safeguard of the prosperity of any 
corporate enterprise, and the best preventive of irregularities 
and frauds. Many men will do in secret what they would 
fear and refuse to do under the public eye ; and if hitherto 
secret ways are, in the future, made known, and seen of all 



936 THE CRISIS OF I907 AND ITS CAUSES. 

men, there will be less law breaking and unfaithfulness 
among many classes of business men in high places. 

This doctrine of publicity I have preached for years, and 
it was the topic of an address I delivered before the Whar- 
ton School of Political Economy in the University of Penn- 
sylvania eighteen months ago. I saw then what was going 
on in corporate corruption and grafting, and railroad re- 
bating, but, of course, had no tangible evidence or legal proof 
of these misdoings. 

During the intervening time, however, so much of this 
came to light that there was no alternative for the national 
government, as well as many of the states, but to take drastic 
action to stop these evils, and probe right and left to locate 
and convict those responsible for them. President Roose- 
velt led the way to this laudable end. He is not in favor 
of persecution, however ; but he is in favor of the prosecution 
of those known to be guilty; and I firmly believe that his 
courageous stand in this movement to correct and punish 
corporate abuses will overshadow, in the history of his Presi- 
dency, all his other achievements. 

Remember: he would punish only the guilty and protect 
property interests in every way possible, so that the innocent 
may not suffer with the guilty, or at least suffer as little as 
possible. 

The lawyers engaged to defend wealthy corporate wrong- 
doers may sometimes prevent their conviction and punish- 
ment; but the people are entitled to the protection which 
comes from an equal administration of justice. 

In these days the truth of the biblical saying, that " the 
wicked flourish like a green bay tree, but they shall be cut 
down," has become evident to us in certain instances ap- 
plicable to corporations. 

Some ancient cities and empires, including the great Ro- 
man Empire, were ruined by the lawlessness and unscrupu- 
lousness of their rich men — the great oppressors of those 
days — and our America was fast falling too much under 
control of large corporations and corporation capitalists ; but, 



THE CRISIS OF I907 AND ITS CAUSES. 937 

the plain people of this country are for equality, equal rights, 
and fair play for all, and opposed to a plutocracy. 

In his address at Memphis, this year, President Roose- 
velt said: 

" I will no more stay my hand because a wrongdoer mas- 
querades as a labor leader than if he masquerades as a cap- 
tain of industry. 

" I am against undesirable citizens when they are great 
capitalists who win a fortune by chicanery and when they 
are men who, under the guise of standing for labor, preach 
and encourage violence and murder." 

To show that he recognized the sensitiveness of certain 
corporation capitalists who are cast into a frenzy by his 
most common sense remarks, he once said : " It has come to 
a point where my saying that honesty is the best policy is 
liable to lead to a run on the banks." 

In discussing the cause of the present panicky contraction 
and disturbance in the business and financial world, nothing, 
however, could be further from the truth than to charge it 
all to the great corporation exposures and prosecutions. 

There were many other things that contributed to bring 
about this year's depression and disturbance, and to cast 
over the brightest sky that ever shone the heavy clouds of 
distrust, reaction, and panic. 

The clouds in the financial sky can remotely be attributed 
in a large measure to the effect of the tremendous railroad, 
industrial and commercial development of the last ten years, 
which brought about capital requirements in excess of the 
ability of the country to supply them. 

Naturally and necessarily, this resulted in precautionary 
steps being taken by bankers and others to limit demands 
that capital could not supply. 

This conservatism and consequent contraction of the over- 
whelming volume of business, will, it is believed, prove the 
strongest force in averting further trouble and disaster. I 
have for some time been urging the application of this brake, 
or safety valve, of conservatism, and it is really imperative. 



938 THE CRISIS OF I907 AND ITS CAUSES. 

In an effort to meet the demands of the enormous business 
offered them, the great railway and industrial corporations 
sought to enlarge their equipment at vast expense. In this 
they acted unwisely. They overtraded. To use a common 
saying, " they bit off more than they could chew." It was, 
perhaps, excusable, not very long ago, when confidence was 
in its zenith and credit superabundant, to attempt the financ- 
ing of mammoth undertakings. But unexpectedly and like 
a bolt out of a clear sky, came the startling insurance and 
other exposures, and gradually timidity took the place of 
confidence. Then capital, which is always more timid than 
usual at such times, began to contract, and many railway 
and industrial corporations found themselves unable to bor- 
row the large sums needed to meet their extraordinary ex- 
penditures. 

The banks in many instances, having already over-extended 
credits, were unable to provide the necessary funds, and new 
securities, owing to excessive supplies and other causes, 
ceased to find the ready market that they had enjoyed for 
so long a period. Investors took wing. Curtailment, there- 
fore, in every direction became a necessity, so President 
Koosevelt can no more be blamed for the existing depression 
and panicky disturbance than he can be credited with all 
the great prosperity that preceded the crisis. 

That this reaction, culminating in a panic so severe, came 
just at the time it did, is largely if not wholly coincidental. 
It cannot be denied, however, that the startling disclosures 
of wholesale wrongdoing on the part of many of the great 
railway and industrial corporations disturbed the confidence 
of the public to the core and paved the way to it. 

The indictment and prosecution of the rich and powerful 
corporations that had been violators of the law were but the 
necessary and legal consequences of their own guilty conduct. 

Article II, Section 1, of the Constitution of the United 
States requires that before he enters on the execution of his 
office the President shall take the following oath : "I do 
solemnly swear that I will faithfully execute the office of 



THE CRISIS OF I907 AND ITS CAUSES. 939 

the President of the United States, and will to the best of my 
ability preserve, protect and defend the Constitution of the 
United States." 

Section 3 of the same Article of the Constitution, in enu- 
merating the duties of the President, says : " That he shall 
take care that the laws shall be faithfully executed." 

As at the time of his inauguration as President of the 
United States, Theodore Roosevelt solemnly swore that he 
would faithfully execute its laws, all of you, I know, will 
agree with me when I assert that he was bound to loyally 
and fearlessly keep that oath. 

As an honest man, he has only tried to do his duty. He 
has attacked the law-breaking corporations, and those in 
control who have amassed large fortunes out of them dis- 
honestly, and these only. ~Not to have prosecuted and to 
have let these corporations, and their officers, go on, un- 
checked and unpunished, would have been to violate his oath 
of office and to neglect the duty imposed upon him. 

It would certainly make a farce of this great republic, 
and cast a stigma upon our integrity, if the laws of the land 
were not enforced against the rich and the poor alike ! No 
such reflection as that upon our national honor will ever 
be tolerated by Theodore Roosevelt! He has been ready at 
all times to uphold the national honor. It has been well 
said that the honor of the nation is the soul of the nation. 

President Roosevelt's resolute and unyielding stand for 
the rights of the people, against the powerful corporate 
wrong-doers who had thrived so long upon their secret mis- 
deeds, has commanded the attention and admiration of the 
world. His excess of earnestness and denunciation at times, 
we can forgive. 

Victor Hugo, in speaking of one of the world's greatest 
" Immortals," truly said : " When a man is a glory in the 
face of his nation, that nation which does not perceive the 
fact astounds the human race around." 

President Roosevelt has proved himself a successful cru- 
sader against successful corporate dishonesty, involving vio- 



940 THE CRISIS OF I907 AND ITS CAUSES. 

lations of law; and it is doubtful, as lie says, whether his 
policies have had any material influence in bringing about 
the severe depression and banking crisis of this memorable 
year. But whether they have or not, he declares, with the 
courage of his convictions, that during the remainder of his 
term he will not swerve from these policies, but persevere 
in them unflinchingly. Yet all that his administration has 
done has been to unearth the wrongdoing. It is impossible 
to cut out a cancer without making the patient feel tem- 
porarily worse than before. 

It is a mistake, or a slander, to say that Theodore 
Roosevelt has made war against capital. He is only opposed 
to dishonest corporate methods, and dishonestly acquired 
wealth. He respects the possessors of honorably acquired 
and honestly used fortunes, and would protect their property 
interests in every way possible, and guard them against in- 
justice, and be resolute in defending their rights; for their 
success leads to the inference that they are good citizens. 
But he will assuredly stand against crimes of unscrupulous 
cunning in the management of railway, industrial or finan- 
cial corporations as resolutely as he would against crimes of 
brutal violence, and equally punish the rich man and the 
poor man, for crime is crime whether committed by a plu- 
tocracy or capitalist, a poor wage earner, or a mob. These 
are his avowed principles and policies. 

He would regard a man who builds a railway where it is 
needed, and operates it fairly and honestly, as a public bene- 
factor; but if that man manipulated the stock and bonds 
of that railway so as to swindle the stockholders or bond- 
holders, or the public, or gave rebates or otherwise favored 
one shipper over another, he would regard that man as an 
enemy of our institutions who should be punished for his 
wrongdoing. All this goes to answer the question: Is Presi- 
dent Roosevelt's policy towards capital sound ? I say that 
it is, when rightly understood ! 

Furthermore, the regulation of corporations by the Fed- 
eral Government should be made absolute, and taken away 



THE CRISIS OF I907 AND ITS CAUSES. 941\ 

from the States, where they do an Interstate business, like 
the railways and express companies. This would be better 
for the corporations, themselves, as well as the people than 
present conditions. They should be placed under National 
control, just as the National Banks are. 

This central undivided control would do away with the 
confusion of Federal and State authority now existing. 
Moreover, I would favor the extension of this Federal con- 
trol to all interstate corporations, and it will come in time. 
Meanwhile President Roosevelt is paving the way for it, 
and to him let us give all honor for his long step in the 
right direction. 

But, now that Mr. Roosevelt has substantially achieved 
his purpose, he can well afford to rest satisfied that his work 
will continue to bear good fruit without any further public 
addresses on the subject. 

The people are already familiar with his views, and their 
continued reiteration by him in his speeches, especially 
during this period of financial and industrial distrust, de- 
pression and unsettlement, would tend to inspire fresh un- 
easiness as to the situation and the value of corporate stocks 
and bonds. It would do this, owing to the extreme nervous- 
ness and timidity of capital that prevails. 

It is this abnormally sensitive and apprehensive condition 
of public feeling that led to the recent senseless run upon 
certain New York trust companies, and in a minor degree 
upon banks and savings banks, and that caused very many of 
the depositors, after withdrawing their money, to hoard it 
in safe deposit vaults, and various less safe receptacles, in- 
stead of depositing it in other institutions. 

Their hoarding it, naturally made conditions all the 
worse, through very seriously increasing the stringency of 
the money market. So great became the scarcity of loan- 
able funds that from the 23d to the 31st of October, call 
loans were made daily on the New York Stock Exchange 
at rates averaging 50 per cent per annum, with some 
ranging from 75 to 100 per cent. Such hoarding, on 



942 THE CRISIS OF I907 AND ITS CAUSES. 

a large scale, is fraught with great danger, as it involves a 
sudden contraction of the circulation and drain upon bank 
reserves. In this instance it caused renewed panic and 
fresh breaks in stocks, and it alone compelled the New York 
Bank Clearing House members to vote unanimously to 
issue Clearing House Certificates — nothing else would have 
offset the run on deposit institutions. 

It would be very far from President Roosevelt's wish to 
say or do anything that would cause people to hoard money 
instead of employing it in customary channels ; for hoarding 
is a public injury and contrary to good citizenship. Fur- 
thermore, it is entirely un-American. But the public mind 
has been wrought up to such a pitch of distrust and semi- 
hysteria, through the disclosures of corporate dishonesty, 
and other disturbing causes, that a false, or at least exag- 
gerated, impression exists among many that all corporations 
are, or may be, in the same boat. This want of confidence 
in the situation is very largely what has caused the heavy 
and prolonged liquidation in stocks, and led to the bank 
and trust company runs and great monetary and industrial 
disturbance we have witnessed in this great and far-reaching 
crisis. 

Mr. Roosevelt will, therefore, see, now that he is becoming 
more and more cognizant of the situation, that what the 
public, and particularly the investing class, needs in this 
period of stress and storm and anxiety, is to be calmed and 
reassured and made aware that there is a silver lining to 
the cloud, and no good reason for their loss of confidence ; 
for the country is still as great and grand, and prolific in 
its resources, as ever, with its future no less promising and 
magnificent than it was before this crisis darkened the sky. 

It is known that he takes this view of the situation, and 
is earnestly co-operating with the Secretary of the Treasury 
to ease the money market and restore confidence. 



CHAPTEK LXXXII. 
OUR GREAT AMERICAN PANICS FROM FIRST TO LAST. 

THE panic of 1907 naturally revived public interest in 
all our previous panics, and therefore a brief Historical 
review of these is timely. The small one that followed the 
throwing overboard of the historic tea in Boston harbor 
in George the Third's time, and which was the prelude to 
the War of Independence — the victorious struggle of the 
old Thirteen Colonies to throw off the British yoke — was 
of no importance, owing to the country's scanty trade and 
banking development, and the corresponding scarcity of 
credits. It was a tempest in a teapot, this sequel to the Bos- 
ton tea party. 

The panic of 1812 was the first of much magnitude in 
the history of the United States, and it resulted from over- 
trading and undue expansion in all directions, but was pre- 
cipitated by our war with England in that year. The bank- 
ing capital of the country was then only seventy millions 
of dollars, yet more than ninety banks failed in the run 
upon" their deposits that ensued, and the Government found 
great difficulty in raising a war loan. Meanwhile, trade and 
manufactures, which had been very active and prosperous 
before the declaration of war, suddenly became almost par- 
alyzed. 

The change from undue inflation to the undue contrac- 
tion born of fear was disastrous in its wholesale destruc- 
tion of market values and credits. But the Government 
war expenditures, after it had succeeded in disposing of its 
securities, gradually stimulated recovery from the worst 
effects of the panic, and industries that had been suspended 



944 OUR GREAT AMERICAN PANICS. 

were resumed, thus re-employing labor that had been left 
idle. 

Not much has been recorded of the panic of 1823, which 
caused trade depression till 1825, so it was evidently much 
milder and less disastrous than that of 1812. It was an- 
other instance of the reaction that follows over-trading and 
an over-extension of credits, without any war or other great 
event to precipitate it. 

The panic of 1837 was, however, much more serious and 
disastrous, because it involved far greater results owing to 
the growth of the United States in extent, population, and 
wealth in the interval. Like its predecessor, and indeed 
all other panics, it was due to the over-extension of trade, 
speculation and credits, but it was precipitated by the trou- 
bles of the United States Bank, and President Jackson's 
hostility to that institution. 

Speculation had been running wild, particularly in land 
and new railway projects, which were then in their infancy 
in England. The achievements of George Stephenson, the 
builder of the first locomotive engine there, had quickly 
kindled the fire of railway enterprise in this country, and 
promoters busied themselves in raising capital for building 
and equipping railways here; and incidentally it gave a 
strong impulse to the widely prevailing speculation in land. 

The panic of 1857 was, of course, infinitely greater in 
its extent and consequences than that of 1837, owing to the 
same causes that made the latter greater than that of 1812, 
namely, the growth of the territory, population, and wealth 
of the United States. Its main cause can be traced to the 
enormous increase of speculative enterprise in this country, 
especially in railway building, following the great gold dis- 
coveries of 1849 in California. But its immediate cause was 
the general alarm produced by the failure of the Ohio Life 
and Trust Company, which had its principal agency in Wall 
Street. 

There, at the corner of Nassau Street, it had long been 
regarded as a pillar of financial strength, and no institution 



OUR GREAT AMERICAN PANICS. 945 

in the United States stood in higher credit or commanded 
greater confidence, although without any good reason. 
When it suspended payment, the news came upon the pub- 
lic with the suddenness of a thunderbolt from a clear sky. 
The unexpected shock filled the financial and mercantile 
community with dismay, and from one end of the country 
to the other credit was destroyed. 

This, indeed, was panic. Bank-notes were everywhere 
distrusted, and presented for redemption; whereupon the 
banks everywhere suspended specie payment, except that 
the Chemical Bank of New York redeemed its own notes. 
Business depression and thousands of failures from Maine 
to California followed, and nearly three fourths of the rail- 
ways, and other large corporations, defaulted in their in- 
terest and other payments, and went into the hands of re- 
ceivers. The depression grew deeper from month to month 
for more than a year after the panic, and some of the best 
railway stocks declined to $3 to $5 a share, including Mich- 
igan Southern and Harlem. Meanwhile corporate fore- 
closure sales and reorganizations told the story of the finan- 
cial wreckage of the time. 

The country had not long recovered from the effects of 
this great panic when, on the 4th of March, 1861, Lincoln 
was inaugurated President, and the Civil War broke out. 
There was severe depression — a war crisis — then, but it 
was so slow, insidious, and prolonged that it was never called 
a panic. It may be said to have commenced — in anticipa- 
tion of the threatened war of the South against the North 
— with Lincoln's election in November, 1860, and to have 
continued till the Government began to issue the paper 
money of the war era in 1861, after the suspension of 
specie payments. 

One feature of the panic of 1857, and the prolonged 
depression that followed it, duplicated the experience of 
1837, and that was the almost universal prevalence of what 
were called " shinplasters." These were practically I O Us 
given as change by anyone who had received a bank-note 



946 OUR GREAT AMERICAN PANICS. 

or check for more than the amount due him in payment 
for anything. In New York the notes of solvent New York 
banks were never refused in payment, while those of banks 
elsewhere were tabooed; but in making change, no specie 
was given, the banks having suspended specie payments. 
So, unless the exact amount was tendered, shinplasters were 
given for the balance. 

The city was flooded with these personal evidences of 
debt for small amounts, issued by storekeepers, hotels, res- 
taurants, saloons, barbers, and the rest of mankind, and 
many of these were passed from hand to hand till they 
became too dirty and dilapidated to be handled. They were 
the worst kind of filthy lucre, and understood to be only 
redeemable on a return to cash payments by the banks. 
But of course many of them never were redeemed. They 
ranged in amount from one cent to several dollars, and this 
sort of scrip was more or less extensively issued from Maine 
to Texas. 

The Black Friday Gold Panic was a "Wall Street convul- 
sion, and not far reaching, like the others. It occurred 
on Friday, September 24, 1869, and was the result of a 
conspiracy, headed by Jay Gould, to corner gold, and force 
the " shorts " and importers to buy at a high premium. 
The Tenth National Bank, in Nassau Street, which he, and 
those associated with him, managed to control, became con- 
spicuously involved in the corner through over-certifying 
their checks to the amount of about $7,500,000 on that day, 
and, as a result, it was closed by the Government bank 
examiner. Several scandals cropped out in connection with 
this conspiracy to corner gold, one of which involved the 
resignation of the New York Assistant Treasurer, and an- 
other two brokerage firms employed by the gold cornerers 
to buy and receive their gold. Gold, after being bid up 
by the conspirators day by day from 119^ to 162J, broke 
thirty per cent on the announcement that the Government 
would sell five millions of gold. This was followed by the 
suspension of the Gold Clearing House Bank, and the Stock 



OUR GREAT AMERICAN PANICS. 947 

Exchange was also closed to check the panic in stocks 
that ensued. While not a commercial panic, Black Friday 
was very disastrous to many in Wall Street. 

Next came the tremendous panic of 1873, which, com- 
mencing in "Wall Street, on September 13, with the failure 
of several prominent banking and brokerage firms, includ- 
ing Howes & Macy, Kenyon Cox & Co. (in which Daniel 
Drew was a special partner), Fisk & Hatch, and then Jay 
Cooke & Co., rapidly spread, and soon covered the entire 
country. Many other failures followed these from day to day, 
and crowds of sightseers besieged Wall Street from morning 
till night, while the Stock Exchange was closed, and re- 
mained closed for ten days to prevent the sacrifice of stocks. 

The severity of the distress that prevailed may be in- 
ferred from the fact that on the 19th of September twenty- 
two Stock Exchange firms suspended payment. Rumors of 
bank and trust company troubles flew thick and fast, and 
there was a heavy run on their deposits, while the Union 
Trust Company was temporarily forced to close in order to 
raise money on its assets to meet the run upon it. Several 
banks were known to be unable to stand the general run 
any longer, when, on the evening of September 20th, the 
New York Clearing House resolved to issue $10,000,000 
of Clearing House loan certificates, in accordance with the 
resolution adopted to meet the crisis of 1860-61. It was 
on the same date that the Stock Exchange was closed by 
its governing committee. 

On the 24th of September an additional issue of $10,- 
000,000 of certificates was authorized, and on the 27th, so 
great and widespread had the panic become that all restric- 
tions upon their issue were removed. The banks, instead 
of paying checks in cash, except for small sums, to deposi- 
tors, certified them, payable through the Clearing House, 
and the weekly bank statement of the Association was sus- 
pended on September 27th, and not resumed till December 
28th. The amount of Clearing House loan certificates at- 
tained its maximum — $22,400,000 — on October 20th. In 



948 OUR GREAT AMERICAN PANICS. 

the interval business was resumed on the New York Stock 
Exchange on September 30th, after its ten days of suspen- 
sion. While it remained closed there was a curb market 
on Broad Street for stocks and bonds, but sales for cash 
there could only be made at panic prices. The crisis of 
1873 was far more severe than that of 1907, and recovery 
from it was very slow. The panic of 1884 extended far be- 
yond Wall Street, but was most severely felt there. 

There was a stock market panic in 1890, due to the 
failure of Baring Bros. & Co., in London, and heavy gold 
exports from this side to allay the panic there, but it did 
not spread much beyond Wall Street, and was soon over. 
The panic of 1893 was, however, severe and extensive, and 
15,000 failures were attributed to it throughout the coun- 
try. As usual, it resulted from undue speculation and ex- 
pansion in trade, stocks, and new enterprises. But it was 
more immediately caused by the agitation of the 16-to-l 
silver heresy, which led to a run on the gold in the United 
States Treasury till the amount of free gold held by it, at 
all points, was less than twenty millions, while the amount in 
the Sub-Treasury in New York was reduced to only about 
$8,700,000. It was then, in February, 1893, that President 
Cleveland made his famous gold purchase for United States 
bonds from the Morgan-Belmont syndicate, namely 3,500,- 
000 ounces of gold for $62,312,500 of four per cent bonds. 
This, aided by the syndicate's efforts, stopped gold exports 
and replenished the supply of gold in the Treasury, and so 
restored confidence. Therefore the run ceased; and after 
that the largely increased customs duties gradually swelled 
the gold belonging to the Government to a far larger amount 
than it had ever held before. 

Coming down to the panic of 1907, we are confronted 
by its causes. These were cumulative, but, as in every pre- 
ceding crisis, the main cause was far too large a mass of 
credits — that is, of debts — for the amount of cash in which 
they were redeemable. Trade and speculation had been 
long so active, and too often recklessly expanded, that this 



OUR GREAT AMERICAN PANICS. 949 

disproportion had become dangerous, and a menace to our 
safety, as I pointed out several times months before the 
crisis actually came. I said that a serious reaction, a seri- 
ous revulsion, was inevitable unless we moderated our pace 
and mended our ways in the matters that I have elsewhere 
referred to and criticised. 

From my knowledge of banking, and my personal experi- 
ence of our previous panics, dating from that of 1857, I 
could foresee that this vast and growing disproportion be- 
tween the volume of credits and cash would finally lead to 
collapse. This disproportion is always large, and always 
becomes larger in periods of activity in trade and specula- 
tion. But in this country, and particularly among our spec- 
ulative Wall Street millionaires and promoters, it had be- 
come unwieldy, while, very largely, liquid capital had been 
converted into fixed forms that were unavailable in raising 
cash. 

Yet the people generally did not see the danger and 
take alarm till, on October 21, the New York Clearing House 
was notified by the Bank of Commerce that it would not 
clear for the Knickerbocker Trust Company after the fol- 
lowing day; and simultaneously the Clearing House made 
an examination of the Mercantile National Bank, and or- 
dered all its officers and directors to resign at once, prepara- 
tory to assisting it. 

Then the public suddenly took fright, and the run upon 
the deposits of the Knickerbocker Trust Company caused 
it to close its doors about two hours after it had opened 
them the next day. This added fuel to the fire of distrust, 
and the run on the Trust Company of America and its 
Colonial Branch, and also on the Lincoln Trust Company, 
began; and six banks and a trust company suspended in 
Brooklyn, and the Hamilton Bank in Harlem, on the day 
following. 

At the same time there was a heavy withdrawal of de- 
posits from all the banks and trust companies, and the 
money thus withdrawn was not deposited in other institu* 



950 OUR GREAT AMERICAN PANICS. 

tions, but hoarded. Hence the severe monetary stringency 
that ensued, which caused call loans on the Stock Exchange 
to command as much as forty to fifty per cent per annum 
at one time, and from fifteen to twenty-five till the end of 
the year. 

The New York Clearing House saw the urgent need of 
promptly fortifying the banks in the Association against 
the drain on their deposits, and, on October 26, resolved to 
issue Clearing House certificates against such satisfactory 
assets as they might deposit, these certificates to be used by 
them instead of cash, in paying their daily balances at the 
Clearing House. This gave immediate relief to the banks, 
and was the signal for every other bank clearing house in 
the large cities to do likewise, besides which many of the 
country banks issued checks of their own, from one dollar 
up, in payment of checks against deposits. 

The other principal features and details of the crisis I 
have given elsewhere. But it must not be overlooked that, 
severe as it was in its actual effects, it was very largely 
sentimental in the sense that it was precipitated by fear — 
fear born of distrust. That is the immediate cause of all 
panics, but without the superinducing causes this fear would 
not exist. In our case it was the very seriously impaired 
credit situation, arising from a multiplicity of contributory 
causes, which inspired the fear that caused the runs on the 
banks and trust companies, and the hoarding of the money 
withdrawn, as well as the withholding of other money 
which, in the absence of distrust, would have been depos- 
ited. To fill the vacuum caused by hoarding, we outdid 
all our previous efforts by importing about a hundred mil- 
lions of gold. 

This hoarding, and consequent stringency, apart from the 
issue, in all, of $81,000,000 of Clearing House loan cer- 
tificates, was responsible for the premium on currency, 
which at one time was quoted at four to five per cent, for it 
practically forced the banks to a partial suspension of pay- 
ments involved in requiring checks to be made payable 



OUR GREAT AMERICAN PANICS. 951 

through the Clearing House, except in cases where they 
were willing to accommodate depositors with small amounts 
of currency. But fortunately the premium, which had 
dwindled to J @ f on the 31st of December, disappeared 
at the beginning of 1908. Meanwhile, all through the 
crisis, large employers of labor had found great difficulty, 
and incurred much expense, in obtaining currency enough 
to pay wages; and in Pittsburg and other labor-employing 
centers, wages were paid largely in scrip issued by the banks 
or employing corporations. This scrip was so generally 
issued that in Pittsburg all the street car lines accepted 
it for fares. 

No wonder that these conditions seriously checked buying 
of all kinds, and caused demoralization and semi-paralysis 
in industrial corporations, and that hundreds of thousands of 
operatives were thrown out of employment by the stoppage 
or curtailment of work in mills and other manufacturing 
establishments. But the storm being over, and the money 
market again easy, there is every prospect of gradual, if not 
rapid, recovery to a normal standard of prosperity in our 
trade and manufacturing industries. It was not till Janu- 
ary 11, 1908, that the Clearing House reported the deficit 
in the bank reserves wiped out, and a surplus of $6,084,050 
accumulated against a deficit of $11,509,550 on January 3d, 
and at one time of $81,000,000. 

It should not be thought, because we imported a hun- 
dred millions of gold from Europe to relieve the mon- 
etary stress produced by the crisis, that we thereby placed 
this country under obligations to any other country. The 
gold we imported we bought and paid for from our own 
resources, equivalent to cash, in the shape of exports of 
cotton, grain, petroleum, copper, and other American pro- 
duce. 

These commodities were even more necessary to Europe 
than the gold we purchased there was to us. So the trans- 
actions on both sides were mere matters of bargain and 
sale, no favor being shown on either side. Indeed, both 



952 OUR GREAT AMERICAN PANICS. 

England and France did all they could to restrict our im- 
portations of gold. The extraordinary advance of the Bank 
of England rate to seven per cent, and its retention there 
till we discontinued our purchases of gold, furnished prac- 
tical proof of this. This was justifiable, of course, as a 
defensive and protective measure for the bank, but none 
the less it was an obstacle placed in our path. 

Its proclaimed purpose was to prevent our taking gold 
from Europe as much as possible, yet in the face of this 
heavy handicap we bought and paid for and imported all 
the gold we wanted, and it was not till after we had stopped 
buying that the Bank of England lowered its rate to six per 
cent. This showed that we controlled the Bank of England 
more than the Bank of England controlled us. We were 
not assisted; we assisted ourselves, and neither asked nor 
received favors. 

This important fact testified to the strength and wide 
sweep of our resources, both financial and commercial, and 
also to the solidity and soundness of our business position, 
and the foundation on which it rested. The firmness, too, 
with which we bore the enormous strain of the crisis, and 
the good order and condition in which we emerged from 
it, were equally eloquent in testifying to the same effect, 
and showing that ours is indeed a great country — the great- 
est of all nations in its material resources and acquired 
wealth. 

The advantage of this is largely shared by us with the 
rest of the world, both in our enormous foreign trade and 
the vast amount of money spent every year by American 
tourists in Europe. If the hundred and fifty millions of 
dollars spent by them there in 1907 had been kept at home, 
it might have obviated the necessity of our importing gold 
to relieve the crisis. Europe has good reason to return 
thanks for all it gets from us; and what would the trade 
and commerce of Europe be, in this progressive age, with- 
out the United States of America? 

The strength, the resolution, and the courage with which 



OUR GREAT AMERICAN PANICS. 953 

the country, as a whole, bore the brunt of the crisis of 
1907 augurs well for a rapid recovery from its effects, and 
paves the way to renewed prosperity and progress; and 
there is every probability that it will recuperate more swiftly 
from the great and trying ordeal than it did from the 
memorable panics of 1812, 1837, 1857, 1873, 1884, and 
1893, for its wealth, population, and general resources are 
now so vastly greater than they were at any of those periods 
that comparisons are out of the question. 

The growth of our banking system alone since 1873 is 
indicated by the fact that in the very severe panic of that 
year the New York Clearing House issued only $16,000,000 
of Clearing House certificates to the banks belonging to it, 
whereas in the panic of 1884 it issued $21,000,000, in the 
panic of 1893 $41,000,000, and in this last panic of 1907 
no less than $81,000,000. The crisis was severe but it was 
purifying, and eliminated a vast amount of unwholesome 
and dangerous, if not dishonest, speculative elements from 
the management of many of our banks and large railway 
and industrial corporations, and left in its place the legacy 
of a higher standard of business morality than we had be- 
fore. Hence, perhaps we may say, with Shakespeare, all's 
well that ends well, and, with the Bible, out of evil cometh 
good. At least we have plucked the flower Safety from 
the nettle Danger. 

This view of our country, and the situation, is shared 
by the banking community of the Old World, who also 
absolve President Roosevelt from blame or responsibility 
for the crisis. In this connection a leading London banker, 
Mr. H. H. Raphael, a member of Parliament and one of 
the most influential and popular financial men in Great 
Britain, said, in December: 

" We regard President Roosevelt as not only one of the 
most courageous, but one of the ablest of all your long 
line of distinguished Presidents. We admire him for his 
courage and independence. No wonder the heart of the 
American people is with him ; he is giving you a good house- 



954 OUR GREAT AMERICAN PANICS. 

cleaning, and you well need it; and although you are pass- 
ing through financial storm and stress now, we know some- 
thing of the wonderful recuperative power of the United 
States, and it will not be long before America will be forg- 
ing ahead on the highway of economical progress, cleaner 
and stronger than ever." 

This opinion is well worth quoting because of its evi- 
dent sincerity. There is no suspicion of politics or office- 
seeking about the allusion to President Roosevelt, and if 
one man more than any other in this great country of ours 
deserves the resounding applause of a national " Hip ! Hip ! 
Hurrah ! " for his public services, it is President Roosevelt. 



CHAPTEE LXXXIII. 
WALL STREET AS IT REALLY IS. A VINDICATION. 

MANY people, and some newspapers, have a false im- 
pression that Wall Street is a gambling arena that 
does a great deal of harm and no good, and that it ought 
to be, as far as possible, abolished, while Wall Street spec- 
ulators have been recklessly and unjustly denounced as 
gamblers. 

But those who know Wall Street well have no such im- 
pressions of it, or its speculators, or of the Wall Street 
community of bankers and brokers. They can, on the con- 
trary, testify that there is no more honorable and respon- 
sible body of men in the world than its bankers and the 
members of the New York Stock Exchange, and that no- 
where is honesty, integrity, and good faith more resolutely 
exacted than on that Exchange, as its constitution, by-laws, 
and rules clearly show; and nowhere is a black sheep, when 
discovered, more quickly and severely punished than there. 
The penalties involve expulsion from membership, or sus- 
pension for any length of time the Governors may think 
proper for violations of its rules, and they are rigorously 
enforced in all cases. The same remarks, I am glad to say, 
apply substantially to the stock exchanges in Boston, Phila- 
delphia, Baltimore, and other cities. 

During the crisis of 1907, and the exposures of corporate 
irregularities that preceded it, no members of the Stock Ex- 
change were implicated in the wrongdoing that surprised 
and shocked the public. The men in control of the life 
insurance companies that were examined and held up to 
scorn, for their misuse and misappropriation of other people's 



956 WALL STREET AS IT REALLY IS. A VINDICATION. 

money, were not members of the Stock Exchange, nor were 
they Wall Street men. 

The men who wrecked the Metropolitan Street Railway 
System were not members of the Stock Exchange, nor were 
those apostles of unsound banking, the speculative bank pro- 
moters who gained control of the three chains of New York 
City banks to promote their own speculative purposes, and 
inadvertently paved the way to the panic; nor was a mem- 
ber of the Stock Exchange responsible for the failure of 
the Knickerbocker Trust Company, or at all involved in 
that leading event of the panic; nor was a member of the 
Stock Exchange responsible for any bank, trust company, 
or corporation failure, or run that occurred anywhere dur- 
ing the crisis, or at any time in the panic year. 

Of course there may possibly be undiscovered black sheep 
in Wall Street as well as elsewhere, for we find them in 
church pews, and occasionally even in church pulpits; but 
we should not heap wholesale condemnation upon either 
Wall Street or the churches on that account. 

To call the buying and selling of stocks or bonds, on the 
Stock Exchange, gambling, is a misnomer, a misuse of the 
word, due either to ignorance of the transactions there, or 
malice. It is so whether the purchases or sales are by in- 
vestors or speculators, for speculation on the Stock Exchange 
is not gambling. Whether stocks, or bonds, are bought, or 
sold, by investors or speculators is immaterial between the 
contracting brokers on the floor of the Exchange. They 
know no difference whatever. Delivery of the stocks or 
bonds is made by the one, and received by the other, in 
every case, and payments made accordingly, at the sale and 
purchase prices, investment and speculative transactions 
being treated exactly alike. 

A sale and purchase is the work of a moment in the Board 
Rooms, and no voucher is exchanged to prove it till com- 
parisons are made at the brokers' offices, usually after the 
Exchange closes. But no contract thus made in an instant 
of time is ever repudiated, no matter how heavy a loss it 



WALL STREET AS IT REALLY IS. A VINDICATION. 957 

may involve to buyer or seller, for the penalty of such a 
repudiation would be immediate suspension from the Stock 
Exchange, followed by expulsion when proved. 

Members of the Stock Exchange are not only men of 
assured solvency and respectability but of good social posi- 
tion, and generally of large means and more than ordinary 
education and culture. Most of them, too, belong to our 
best clubs. Any conduct of theirs that was considered preju- 
dicial to the interests of the Exchange would render them 
amenable to discipline, and be promptly investigated by the 
Governing Committee, whose duty it is to inflict the pre- 
scribed penalties, in such cases, without fear or favor. 
The fact that a membership has a market value varying 
from $50,000 to $90,000 is a certain guarantee of sol- 
vency and fair dealing under ordinary circumstances. A 
Stock Exchange membership thus carries with it a large 
property qualification, and its owner is a substantial citi- 
zen, who is, as we know, often one of " the Eour Hundred," 
or to be seen in our best society, and whose wealth, in many 
instances, amounts to millions. Preliminary to admission 
also he has to submit to a searching examination by the 
Committee on Admissions. 

Recent attacks upon the character of the New York 
Stock Exchange are entirely unjustified and have been 
prompted by either ignorance or prejudice. If the Stock 
Exchange were abolished great enterprises would soon be 
paralyzed. Without its medium it would be impossible to 
raise the capital for conducting our great railroad and in- 
dustrial corporations; investors would be deprived of the 
means of finding profitable employment for their capital, 
and there would be no free market for the many millions 
of securities there dealt in. Abolish the Stock Exchange 
and the free play of market forces which best develop real 
values; then investors would be kept in the dark and their 
properties would be exposed to grosser manipulations than 
ever thought of by stock market operators. The New York 
Stock Exchange, it should be remembered, is nothing more 



958 WALL STREET AS IT REALLY IS. A VINDICATION. 

than a well-systematized market place for the exchange of 
or trading in securities. From the very nature of its pur- 
pose and its organization it cannot exercise any direct con- 
trol over the management of the corporations whose securities 
are dealt in hy its members. It may establish certain rules 
as to the conduct of business by its members, and may insist 
that only securities of certain standards shall be dealt in 
on its floor. Beyond that it cannot go; and buyers and 
sellers alike, as in all matters of business, are expected to 
exercise their own intelligence as to the merits of invest- 
ments. One thing is certain, that whatever its shortcomings 
there is no organized body of business men where the stand- 
ards of integrity are higher and more fixed than on the 
New York Stock Exchange. Its transactions are carried on 
chiefly by word of mouth ; the spoken word being as sacredly 
kept as signed contracts. Further, there is a Board of 
Governors to whom any complaint can be carried, whose 
purpose is to prevent all abuses within its power and to 
maintain the highest possible standards of business. All 
infractions of the rules are promptly punished. Certainly, 
whoever begins throwing stones at the New York Stock Ex- 
change should first look and see if his own window-panes 
are not in danger. 

A great deal of nonsense is also heard about speculation. 
Now, speculation, like many other good things, may be car- 
ried to excess, and is then injurious and open to the severest 
criticism. But speculation within reasonable limits is most 
beneficial. It is one of the main incentives to enterprise. 
Crush this disposition to venture, or the willingness to accept 
a risk, and enterprise would languish, trade and industry 
would decline, and we should gradually settle down to cer- 
tain industrial and commercial decay. In the present highly 
developed state of modern civilization speculation is a motive 
power of the first importance, and being a part of human 
nature itself cannot be eradicated. In the course of ordi- 
nary business, speculation is the natural balance wheel of 
trade, furnishing a class of operators who are willing to buy 



WALL STREET AS IT REALLY IS. A VINDICATION. 959 

or sell when others for various reasons are disinclined. 
Moreover, by keeping up the conflict between a large body 
of buyers and sellers the true value of securities or com- 
modities is more safely determined than when speculation 
is entirely absent. The short seller is always a buyer at a. 
lower price, and therefore a supporter in case of decline. 
Conversely, the long buyer restrains undue advances by sell- 
ing to secure his profits. Again, the banker is better able to 
judge the value of collateral in a free and active market, a 
factor which is much to the advantage of both legitimate 
borrowers and lenders who may not have the remotest inter- 
est in speculative movements. The giving of credit and the 
making of loans is very largely dependent upon a thorough 
test of values such as speculation only often determines. Of 
course speculation is sometimes carried to excess, and much 
injury results in consequence. Such excesses which are the 
consequence of defects in human nature must always be ex- 
pected and are better corrected by experience and public 
opinion than by any artificial regulation. Who has not the 
right to profit from good business judgment, especially if 
that judgment incurs the risk of the future ; and who should 
complain if his own judgment leads him into losing trans- 
actions? Concerning speculation there is also another fool- 
ish misconception. Speculation is frequently confounded 
with gambling, although the two are radically different. 
Speculation is based upon knowledge and facts, whereas 
gambling deals solely with chance. It is a fallacy to 
suppose that any but a small percentage of transactions 
on the New York Stock Exchange come under the head of 
gambling. What difference is there between buying stocks 
and bonds on part payment, or margin as it is often called, 
and buying land or houses or other property with only one- 
fifth in cash and carrying the balance on mortgage? Such 
transactions are speculative, are strictly moral, and entirely 
a matter of business judgment. All operations entering into 
the future are necessarily speculative. So far as the ISTew 
York Stock Exchange is concerned its rules are drawn for 



960 WALL STREET AS IT REALLY IS. A VINDICATION. 

the strict purpose of protecting legitimate trading, and an 
actual transfer of property is required for every transaction. 
Of course, abuses exist in all trades and will continue to 
exist, rendering it the more necessary to use a little intelli- 
gent discrimination before condescending to loose denuncia- 
tion, which may easily do much harm and no good. 

The President's attack on options in his recent message to 
Congress certainly cannot apply to any business transacted 
on the New York Stock Exchange, as options are not dealt 
in there. Options of from three to sixty days were dealt 
in a great many years ago, but were abandoned long since. 
Every purchase and sale now made on the floor of the New 
York Stock Exchange provides for a delivery on the day of 
purchase, or the following day, and payment made therefor 
upon delivery of the security, and no law can possibly be 
passed by Congress, or the State Legislature, to prevent a 
broker thus buying securities for a customer on part pay- 
ment on terms satisfactory to himself, any more than a 
law could be enacted to prevent a dry goods, hardware, 
grocer, or merchant in any other line from extending 
credit to his customers. Nearly all the business of the world 
is thus transacted, and could not be done on a large scale 
otherwise. In London, however, most of the business is vir- 
tually on an option basis, as it provides for fortnightly settle- 
ments, there being two settlement periods each month, which 
can be extended from time to time indefinitely at the option 
of the parties connected therewith. 

The method of doing business in " futures " prevails on 
the Cotton and Produce Exchanges, and could not well be 
transacted, to the extent of making an active market for the 
benefit of the producers, on any other basis, in my opinion. 
To do away with dealings in futures would simply do away 
with the exchanges, which would be to the disadvantage of 
the farmers. A farmer, as soon as he ascertains that his 
crop is secure, makes a calculation of how long it will take 
to put it in his barn, thrash it out, and transmit it to Chi- 
cago, and he sells it to deliver during that month or a later 



WALL STREET AS IT REALLY IS. A VINDICATION. 961 

one, thus ridding himself of any further risk of fluctuation 
in the price, and is made happy thereby. If he is deprived 
of such a market, it puts him back to the old way of doing 
business, when the large dealers from Liverpool, Chicago, 
and other quarters sent their agents direct to the farmers at 
harvest time, and by bringing all kinds of discouraging in- 
fluences to bear upon them made them sell at a fraction 
above the cost of production ; as against this they are at pres- 
ent able to hold their crop back and get the highest price. 
In having the ready market which now exists the farmers 
have all become rich. Why, therefore, change the present 
plan, which has given so much prosperity to the producers 
of cotton and other products, to what might be likely to 
reverse their present satisfactory condition ? 

Members of the New York Stock Exchange, in cases of 
insolvency, are required, by the rules, to immediately notify 
the Stock Exchange of their inability to meet their con- 
tracts, and the selling or buying in " under the rule," to 
close defaulted contracts, if there are any, usually follows 
the announcement of a failure and failure carries with it 
suspension. But failures in the Stock Exchange are very 
few and far between, considering that there are eleven hun- 
dred members. They are indeed far below the average of 
failures in mercantile business, and they are generally fol- 
lowed by satisfactory settlements and readmission to mem- 
bership, and a resumption of business. 

This speaks well for both the integrity and the conserva- 
tism of Stock Exchange houses. It is very seldom that what 
would be called a bad failure occurs among them. There 
are, in fact, no abuses on the Stock Exchange, for trickery 
and unfair dealing is impossible, owing to the strictness of 
the surveillance and discipline constantly maintained over 
the members, who are also themselves punctilious in keeping 
their contracts and observing the rules, and doing only what 
is fair and square in business. This is essential to their 
own interests and success, as bankers and brokers, without 
regard to the penalty of suspension, or expulsion, for any 



962 WALL STREET AS IT REALLY IS. A VINDICATION. 

irregularity. That penalty they approve of, for it is a pro- 
tection for all of them, except an occasional black sheep 
that they are glad to see weeded out of the Exchange. 

How necessary the Stock Exchange is to the hanks was 
shown during the recent crisis, as in preceding panics, when 
to protect themselves they were forced to call in their loans 
by wholesale, and where necessary to at once liquidate the 
collaterals. It was the Stock Exchange that made this 
liquidation possible, and saved many of the banks and trust 
companies from suspension, as well as many bankers and 
brokers, who were enabled by it to pass through the trying 
ordeal, instead of going to the wall in Wall Street. 

The Stock Exchange therefore obviously performs a great 
and very useful and important function in monetary affairs, 
besides being the barometer of values for stocks and bonds, 
as measured by prices, while the cotton and the grain ex- 
changes perform a similar service with regard to those specu- 
lative commodities. 

Yet one effect of the crisis of 1907 has been to give a new 
impulse to Wall Street detraction, and sharpen the teeth 
and claws of the detractors. While many are mistaken 
enough to hold Wall Street responsible for the past year's 
financial disaster, many more are equally mistaken in de- 
claring that President Roosevelt caused them by his speeches 
and the Government prosecutions of lawbreaking railway 
and Industrial Corporations. Both charges are unreason- 
able and false, but this consideration is a small matter to 
those who have no hesitation in making reckless assertions 
which they are unable to prove, and who are as ready to vent 
their spite as they are their prejudices. 

Many indeed without knowing anything about Wall Street 
speculation, and who have never speculated anywhere, blame 
speculation for a host of evils that are in no way due to it. 
Some of them would even close the Stock Exchange to stop 
speculation there, forgetting apparently that this would de- 
prive investors and banking institutions as well as specula- 
tors of a market for securities, and make all the stocks and 



WALL STREET AS IT REALLY IS. A VINDICATION. 963 

bonds now listed and dealt in there practically unmarket- 
able. In such an event there would most certainly be a fall 
in their prices greater than any we witnessed in 1907. 

It is true that in the manipulation of stocks matched 
orders may have been occasionally resorted to, despite the 
rule against it on the Stock Exchange, but it is only because 
of the difficulty, or impossibility, of discovering or prov- 
ing it, for there is no body of men subject to stricter dis- 
cipline, or more amenable to it, than the members of the* 
New York Stock Exchange, nor any more patriotic, as their 
generous acts during the Civil War, and at other times, have 
abundantly shown. 

Neither should it be forgotten that they pay the State 
of New York a tax of two dollars on every hundred shares of 
stock they sell, which is an important source of revenue to 
the commonwealth. That the Stock Exchange, as a free 
market for securities, is indispensable to the country is be- 
yond question. It is necessary to our national needs, and 
I am proud of being one of the oldest of its members, my 
membership dating from 1864; and I am able from long 
personal experience and observation to testify to the in- 
tegrity, soundness, and general good character of my fel- 
low members and the banking community of Wall Street. 

Therefore take my word for it that Wall Street is not as 
black as it is painted, and that anyone's money is as safe 
there as anywhere in business, if properly placed, and 
handled with good judgment. If any of it is lost it is by 
its owner, and he has only himself to blame for his ill luck. 
But it is always to the interest of his banker and broker 
to have him make money, for when a customer loses his 
money his broker in some degree shares the loss by losing 
him as a customer. 

In conclusion, I hope that if any of you ever take a flyer 
in Wall Street, you will come out of it, with flying colors, 
on the winning side, and with a good opinion of the Street 
proportioned to the magnificence of your success ! 



CHAPTER LXXXIV. 

THE FINANCIAL AND TRADE SITUATION, PAST, PRESENT 

AND FUTURE, REVIEWING THE CRISIS OF 1907, 

WITH CAUSES AND REMEDIES.* 

IT gives me no ordinary pleasure to address an audience 
of Pittsburg bankers, for Pittsburg is' the hub of our 
iron and steel industry, and as it has no rival in the manu- 
facture of iron and steel, it may well feel proud of its su- 
premacy. It is no exaggeration to say that the rise and 
progress of that industry in Pittsburg is one of the marvels 
of the age. A few years ago Pittsburg was known in New 
York as the Smoky City. A little later she became known as 
the City of Steel and Coal. JSTow, through the alchemy of 
the brains of your wise men, she is known as the place where 
smoke and coal and steel are in some mysterious way mixed 
up in such a form that they till your pockets with pure gold. 
To the millionaire of to-day we bow in deference to his 
wealth. But to the grimy sons of toil, who planted the seed 
and bore the burdens of the earlier days, we take off our 
hats with reverence. The founders of your city chose wisely 
in selecting this spot for settlement, at the river's junction, 
in the midst of rich deposits of coal and iron. It seems 
rather odd that your two greatest products should be glass, 
which is brittle, and steel, which is tough. You also excel 
in producing cork, which is light, and iron, which is heavy. 

* An address delivered by Henry Clews at the annual meeting of the 
Pittsburg Chapter, American Institute of Banking, at Pittsburg, Pa., on 
Tuesday evening, February 25, 1908. 



THE FINANCIAL AND TRADE SITUATION. 965 

Surely extremes meet in your city as well as rivers. Down 
our way we wonder what you do not produce when we learn 
of the diversity of your wares. It certainly seems to me 
that a man could learn a whole lot if allowed to visit all your 
various foundries, factories and mills, but it would take him 
nearly as long as to go through college, as their name is 
legion. The welcome which you have given me touches me 
deeply, and I assure you that in future I shall preach the 
doctrine that there are others in Pittsburg whose mission it 
is to dispense happiness besides Mr. Carnegie. , 

If we glance at the history of steel manufacturing in the 
United States, we find it centered in and very largely con- 
fined to Pittsburg, and if we recall the enormous fortunes 
made in that industry by Mr. Carnegie and many others, 
under the protection of high tariff, we see one of the great- 
est wonders of trade development and modern enterprise. 

Yet it was not until after the beginning of the war be- 
tween the North and the South — the great conflict waged 
from 1861 to 1865 — that any large or even considerable 
amount of steel was manufactured in the United States. But 
now we lead the world in making it, and Pittsburg is our 
great source of supply. At the same time, we can justly 
say that the march of invention and modern improvement 
in other directions has kept pace with the growth of Pitts- 
burg and our marvelous progress in iron and steel-making. 

This reflection is particularly gratifying in view of our 
recent financial crisis, in which New York was the storm- 
center, and Pittsburg almost as stormy for a time. But both 
cities, like the country at large, stood up bravely and made 
the best of the situation by all the means at their command. 
Both fortified themselves by a good emergency measure and 
issued Clearing House Certificates, according to their needs. 
Pittsburg, however, went one or two better than New York, 
and, like many other cities, issued scrip; and better still no 
one in Pittsburg refused it, not even a car conductor for 
fares. Here was public spirit rising almost to the height of 
patriotism. 



966 THE FINANCIAL AND TRADE SITUATION. 

Now, Pittsburg in common with the rest of the country 
is again about on an even keel financially, with its banks on 
a cash basis, its cashiers' certificates and scrip redeemed, and 
its Stock Exchange reopened. But unfortunately the crisis 
gave industry a blow from which it has not yet recovered, 
although conditions are steadily improving all over the 
United States. The iron and steel industry received the 
hardest blow of all, and from a feast you quickly passed to 
a famine, which is a way the iron trade always had. It is 
proverbially, however, as quick to recover as to collapse; so 
all we have to do is to keep up our courage and wait, and 
we may feel assured there is a good time coming. But 
whether it will come soon, or later, is a question about which 
iron-masters, financiers, and trade doctors generally are 
much divided in opinion at present. It is a good sign, how- 
ever, that work has been resumed in fully three-fourths of 
the entire Duquesne works of the United States Steel Cor- 
poration in Pittsburg, although it is admitted that only 46 
per cent of all the Corporation's works are running. 

In September, 1906, when stock and bond prices were 
manipulated abnormally to a 3^ per cent basis, while six 
months' money was loaning at 6 per cent, it was evident that 
one or the other was too high; and considering the growing 
demand for the use of money it became quite apparent it 
was not money that was too dear, but securities. At that 
time I persistently advised every one to get out of stocks 
and out of debt, and keep out for a prolonged period. 

Since then security values went down prodigiously — 
$3,500,000,000 would scarcely cover the depreciation at its 
lowest point of those dealt in on the New York Stock Ex- 
change alone. Our financial situation is vastly different, 
however, from what it was in any of our previous great 
panics, of which there have been a number, since that of 
1857, which began with the failure of the Ohio Life & Trust 
Co. at the time of my advent in Wall Street. I have been 
in all the subsequent panics, and the present conditions differ 
from those of all the other great financial storms because 



THE FINANCIAL AND TRADE SITUATION. 967 

the wealth of the nation has become so vast as to make it 
the richest in actual wealth and productiveness of all nations. 
As a matter of fact, our wealth-making developments have 
been so extensive and excessive as to have forged ahead of 
our banking facilities. This has had much to do with our 
recent setback. Wise and sagacious capitalists saw the hand- 
writing on the wall in Wall Street and elsewhere, and those 
who did unloaded their securities in 1906, dumping their 
stocks at top-notch prices, amounting to at least $1,000,- 
000,000, upon weaker-backed people. 

This unloading, together with the San Francisco earth- 
quake disaster, which wiped out $350,000,000 of property, 
struck the staggering blows which did more than anything 
else to pave the way to the recent panic conditions. The 
selling out by big holders was followed by all the large rail- 
road systems in the country selling huge amounts of bonds, 
stocks and short-term notes. These being offered to stock- 
holders of record at apparently tempting prices, were floated. 
But this great mass *of new securities coming on the market 
was an indigestible one, and absorbed the capital of a very 
large number of the rich men of the country and put it in 
fixed form; and most of these heretofore very rich men have 
ever since been in the position of a man who, having had a 
" Sherry dinner," is urged to accept another dinner at Del- 
monico's immediately afterwards — his wish strong but his 
capacity lacking. 

What produced the panic was a number of adverse factors 
happening one after another in rapid succession. 

I summarize, briefly, the causes as follows: 



FIRST. 

The Boer war which left England in almost as bad a finan- 
cial strait as we were in through the culmination of a sim- 
ilar period of overdoing in trade and speculation in new 
industrial ventures, together with an excess of new issues of 
British Consols during the war period resulting in a recent 



THE FINANCIAL AND TRADE SITUATION. 

decline in the price of these prime securities to 81 — about 
the lowest price on record. 

SECOND. 

Germany was in fully as bad a condition owing to extrava- 
gant industrial enterprises, rivalling our own, and which 
required the most careful nursing to avoid a collapse. 

THIRD. 

France acted alone in financing Russian loans, and in the 
crisis of the Japanese-Russian war was compelled unwill- 
ingly to supply new funds in order to protect the French 
loans already outstanding. Hence France had little or no 
money to lend except to the French. 

FOURTH. 

The Japanese-Russian war brought both of these coun- 
tries forward for the first time as prominent and important 
factors in the world's money market, and both are still, like 
Oliver Twist, crying for " more." This conflict and the 
Boer war combined wasted over $2,000,000,000 of capital. 

FIFTH. 

Funds were almost unobtainable except at prohibitive 
rates at the time of our recent crop-moving period, and for 
causes already mentioned we could not look to Europe for 
help. Usually Europe discounts New York securities bills 
for about $300,000,000 at this period, but last year Europe 
said: "No; we have troubles of our own." 

SIXTH. 

The California earthquake with losses of $350,000,000, 
and the Chili and other earthquakes of less importance and 
severity in various parts of the world were heavy blows at 
prosperity. 



THE FINANCIAL AND TRADE SITUATION. 969 

SEVENTH. 

The compulsory unloading of very many millions of dol- 
lars of stocks and bonds by large capitalists and operators, 
together with immense sales of new securities by corpora- 
tions and railroads, and the manipulation of prices and stocks 
up to a 3^ per cent interest basis while time money was 
loaning at 6 per cent, and above, on the best of collateral. 
Besides which heavy, excessive and reckless operations in 
real estate and mining enterprises having been made all over 
the nation, caused large amounts of capital to lose its liquid 
quality and become fixed. 

EIGHTH. 

The investigation of the great life insurance companies 
and the Metropolitan railroad, and the sad disclosures, fol- 
lowed by the absurd fine of $29,400,000 by Judge Landis 
against a corporation with a capital of only $1,000,000, had 
a demoralizing effect upon the public mind. This prepos- 
terous fine savored of confiscation and alarmed investors. 

NINTH. 

The Interstate Commerce Commission's examination of 
the Chicago & Alton deal and the consequent developments 
further undermined the confidence of investors. 

TENTH. 

The making of injudicious loans by the Knickerbocker 
Trust Co. and the chains of banks, both in Manhattan and 
Brooklyn, which caused the suspension of the institutions 
and arrest of officials on criminal charges intensified public 
distrust, while the collapse of the Copper market unsettled 
the metal markets all over the world and resulted in a re- 
duction of dividends on copper shares, and a serious break 
in the price of all that class of securities. 



970 THE FINANCIAL AND TRADE SITUATION. 

LASTLY. 

A gross abuse of our credit system and the consequent 
inflation of all values, stimulated by loose banking and pro- 
moting methods, proved the climax in a series of events 
which culminated in the sharpest though not the severest 
panic the present generation has experienced. The main 
cause of the panic was that of general overdoing. Credit 
was over-extended; speculation was reckless and ill-advised; 
expansion of every sort was being carried to excess by over- 
confidence, until finally the country's floating capital was 
practically exhausted through being turned too rapidly from 
liquid to fixed forms. We have only to glance at the de- 
mands upon new capital during the last year or two to real- 
ize this fact. 

Some idea of the congested state of the stock market may 
be obtained from the fact that during the last five years 
the total amount of new securities authorized was $6,800,- 
000,000; the eleven months of 1907 alone accounting for 
$2,000,000,000 of this total. 

During the latter period our railroads authorized $1,400,- 
000,000 securities, of which they were able to issue only 
one-half, owing to money market conditions. Of industrial 
securities less than $500,000,000 were authorized, but nearly 
$400,000,000 of these appear to have been issued. 

These figures take no account of the issues of municipal 
securities, and those of many other business concerns of a 
minor character, but they are quite sufficient to indicate the 
extraordinary demands upon the money market during the 
last two years, demands which in connection with huge 
speculative borrowings imposed an unbearable strain upon 
the banks and precipitated the March, August and October 
collapses in the stock market. Other influences have un- 
doubtedly been at work to cause the breakdown, but no single 
factor compares in importance with that of the excessive 
issues of new securities and obligations during the past two 
years which the country was utterly unable to assimilate. 



THE FINANCIAL AND TRADE SITUATION. 971 

In discussing the cause of the recent panicky contraction 
and disturbance in the business and financial world, nothing, 
however, could be further from the truth than to charge 
it all to the great corporation exposures and prosecutions. 

As I have said, there were many other things that con- 
tributed to bring about last year's depression and disturb- 
ance, and to cast over the bright sky of business prosperity 
the heavy clouds of distrust, reaction and panic. 

The recent clouds in the financial sky can remotely be 
attributed in a large measure to the effect of the tremendous 
railroad, industrial and commercial development of the last 
ten years, which brought about capital requirements in ex- 
cess of the ability of the country to supply them. 

Naturally and necessarily, this resulted in precautionary 
steps being taken by bankers and others to limit demands 
that capital could not supply. 

This conservatism and consequent contraction of the over- 
whelming volume of business will, it is believed, prove the 
strongest force in averting further trouble and disaster. 

In an effort to meet the demands of the enormous busi- 
ness offered them, the great railway and industrial corpora- 
tions sought to enlarge their equipment at vast expense. In 
this they acted unwisely. They overtraded. It was perhaps 
excusable not very long ago, when confidence was in its 
zenith and credit superabundant, to attempt the financing of 
mammoth undertakings. But unexpectedly and like a bolt 
out of a clear sky, came the startling insurance and other 
exposures, and gradually timidity took the place of con- 
fidence. 

Then capital, which is always more timid than usual at 
such times, began to contract, and many railroad and in- 
dustrial corporations found themselves unable to borrow the 
large sums needed to meet their extraordinary expenditures. 

The banks, in many instances, having already over-ex- 
tended credits, were unable to provide the necessary funds, 
and new securities, owing to excessive supplies and other 
causes, ceased to find the ready market that they had en- 



972 THE FINANCIAL AND TRADE SITUATION. 

joyed for so long a period. Investors took wing. Curtail- 
ment, therefore, in every direction became a necessity; 
President Koosevelt can no more be blamed for the recent 
depression and panicky disturbance than he can be credited 
with all the great prosperity that preceded the crisis. 

That this reaction, culminating in a panic so severe, came 
just at the time it did, is largely if not wholly coincidental. 
It cannot be denied, however, that the startling disclosures 
of wrongdoing on the part of many of the great railroad and 
industrial corporations disturbed the confidence of the pub- 
lic to the core, and paved the way to it. 

Being now myself optimistic, I look on the sunny side and 
hope for the best. It is, however, a time for conservatism, 
and while trusting in Providence, it is well to keep our pow- 
der dry. It is a good time to cultivate the virtue of patience, 
and make haste slowly until all the aftermath of the panic, 
in the way of liquidation and the elimination of unsound 
timber from business structures, is completed. 

This will leave everything in the financial and industrial 
world stronger than before. It will also leave us with a 
higher standard of business morality resulting from the ex- 
posure of looting and other illegal practices and abuses of 
power in the management of large corporations. The stop- 
page of the evil of rebating by the railroads is of itself a 
great gain in this respect, and for this we have to thank 
President Roosevelt. 

As to the future, Pittsburg and the iron and steel trade 
should be the first to feel improvement in the general busi- 
ness of the country, for iron is still the best barometer of 
the times, as it leads all other industries in both depression 
and recovery, and what an eventful history Pittsburg can 
point to, the world knows. 

It was at Pittsburg that the Bessemer process was first 
applied to steel making in America, and the giant strides in 
the industry that followed its supersedure of the open-hearth 
process not only astonished ourselves but all Europe. It was 
a new departure on a grand scale, this application of science 



THE FINANCIAL AND TRADE SITUATION. 973 

to mechanical methods, a revelation that was marvellous in 
the trade expansion and wealth it produced. 

Yet it is not improbable that before long, if not immedi- 
ately, the Bessemer process by which this immense develop- 
ment was achieved will be very generally superseded by the 
open-hearth process of steel making, which originated and 
had its early development in this country. Thus in the 
whirligig of time it will displace the Bessemer process, by 
which it was itself displaced. This, as you are of course 
aware, is owing to improvements, chiefly by Talbott, an 
American engineer, in the open-hearth process, which for a 
long time has been considered almost out of the race in com- 
petition with the Bessemer process. This reminds us that 
history repeats itself. 

The open-hearth process has now been brought to such 
perfection that its superiority over the Bessemer process is 
declared by many in the trade to be established. Thus prac- 
tice makes perfect, and time works wonders. Its superior- 
ity over the Bessemer process is said to have been particu- 
larly demonstrated in dealing with ores of any but a very 
low phosphorus grade. This American improvement in the 
open-hearth process has been already widely recognized and 
adopted in England, and we are in this way repaying the 
debt we owed to that country for the Bessemer process. 

The steel manufactured in the United States last year ag- 
gregated, 23,246,000 tons, of which 12,275,000 tons were 
by the Bessemer process and 10,971,000 tons by the open- 
hearth process. There were also some other varieties of 
production, copied from processes in use on the European 
Continent, but the general drift, I am informed, is now 
towards the open-hearth process. 

Out of Pittsburg, of course, I should not talk so much 
about steel, but iron and steel are Pittsburg's bread and but- 
ter. This reminds me that apart from agriculture the prin- 
cipal sources of our national wealth are minerals and manu- 
facturing. Mining and manufacturing are primary and 
fundamental industries. Our agricultural income last year,. 



974 THE FINANCIAL AND TRADE SITUATION. 

according to the United States census estimates, was about 
seven thousand millions of dollars, while the metals mined 
were valued at about two thousand millions, against $1,902,- 
517,565 in 1906. 

This metallic product for the year, it is estimated, was 
turned by manufacturing it into materials having a market 
value of fifteen thousand millions of dollars. If we add that 
of agriculture, the metallic products, and manufacturing, to- 
gether, we have a total valuation for the year of twenty-four 
thousand millions of dollars. The fertility of our natural 
resources is here shown by their rapid rate of development. 
But this, while contributing so largely to our present na- 
tional wealth, is not an unmixed good. We should always 
bear in mind that the more we take out of the earth, and 
the more we strip our forests of timber, the less we have 
remaining. In forestry, however, we are now preparing for 
the future by replanting, but we cannot replant minerals. 

The mineral products of this country have more than 
trebled since 1890; more than doubled since 1899; and are 
more than five fold what they were in 1880. From 1900 to 
1906 our mineral product increased at a rate representing a 
hundred and ninety millions a year. 

I am quoting these statistics as a reminder of the vastness 
of our natural resources, and the recuperative power of the 
nation, which is one of the most encouraging features of the 
national situation. These resources are the backbone of the 
country's greatness; and those who can see nothing cheerful 
in the outlook and to whom everything at times looks as blue 
as indigo, will do well to think of them, for they are Nature's 
national banks, that can never fail, and unfailing sources of 
our national prosperity. 

It was these resources, in the form of exports to foreign 
countries, that enabled us to purchase and pay for — without 
borrowing or asking favors — the one hundred millions of 
gold that we imported to relieve the crisis. Here was indis- 
putable evidence of the large international trade balance in 
our favor, and of our monetary and commercial independ- 



THE FINANCIAL AND TRADE SITUATION. 975 

ence of the rest of the world; and this gold we still hold, 
although in the ordinary course of commerce we may reason- 
ably export some of it before long, for we have plenty to 
spare and money is superabundant at two per cent on call 
in Wall Street. Meanwhile our exports of produce and other 
merchandise continue extremely heavy, and they were never 
heavier than during the crisis, that is, in the last three 
months of 1907, while in January, 1908, they rose to a total 
value of one hundred and twenty-eight millions, or $17,742,- 
352 more than in January, 1907. This is all the more 
favorable because our imports since the crisis have very 
largely decreased. In our January exports, cotton alone 
represented $76,687,508 of the total, and breadstuff s 
$24,463,503. 

As to our national finances and the defects of our cur- 
rency system, there is much that calls for reform, but there 
seems to be little or no prospect at this session of Congress 
of the passage of a comprehensive financial measure, al- 
though it is a remedy we need. We shall therefore have to 
rest content for the time being with the much amended 
emergency currency measure, familiar to us as the Aldrich 
Bill. This provides only for the issue of a maximum of five 
hundred millions of currency by the Government to the na- 
tional banks, to ward off a panic or mitigate its effects, the 
banks to pay six per cent interest per annum for whatever 
they take of this emergency currency, and give security in 
acceptable railway, municipal and other bonds for it to the 
Treasury. 

So far, so good. I am, therefore, strongly in favor of the 
Aldrich measure as a panic remedy, naturally so as I orig- 
inated the fundamental part of it. It will do much to pre- 
vent panics, and will effectually stop the hoarding of cur- 
rency that accompanies them, for what inducement would 
there be to hoard it when a supply of five hundred millions 
of new currency would be open to the banks? There could 
be no extreme scarcity of money then; nothing in any way 
approaching the stringency that not only New York but the 



976 THE FINANCIAL AND TRADE SITUATION. 

whole United States suffered under in the last three months 
of 1907. 

Yet the great remedy, the comprehensive financial reform 
measure we need will be ultimately passed by Congress, and 
its provisions will include the modification of the Sub- 
Treasury system, which has always been a source of much 
mischief through locking up Government money received for 
Customs duties and internal revenue taxes, that ought to be 
kept in circulation. The proposition, however, to establish 
a central national bank in New York, or anywhere else, as a 
substitute for it, is to be strongly deprecated. It would be 
a rich plum for those who controlled it, but would excite the 
jealousy and hostility of all the other banks. Moreover, such 
a bank would in effect be a revival of the old United States 
Bank, against which, and the scandals and corruption con- 
nected with it, President Jackson made war so vigorously as 
to force it into liquidation. The second experiment of a 
United States bank was no less involved in scandal and no 
less a failure than the first, and in each case, there was the 
same inglorious end, compulsory liquidation. Both, too, 
were used as political machines, and guilty of favoritism and 
many abuses of power, and a new central bank would give 
us another big political and speculative machine, liable to the 
same evils and objections. Therefore all bankers should 
resolutely oppose a central bank. It would not be a remedy 
for any of the evils complained of, but, instead, furnish us 
with a new complication. 

While we can hardly expect any fundamental changes in 
our currency system at present, one improvement might 
easily be made in it by Congress at once, and that is by the 
removal of restrictions on the amount of national bank notes 
taken out or canceled per month, as well as by establishing 
a bank-note redemption bureau at every United States Sub- 
Treasury, so as to save the delay and expense of sending to 
and from the Kedemption Bureau at Washington, that all 
the national banks are now subjected to. As a minor remedy 
this should be urged upon Congress. 



THE FINANCIAL AND TRADE SITUATION. 977 

Turning to the United States bonds pledged with the 
Treasury to secure the national bank notes, we all know that 
they are as good as gold, if not better, but still they are 
evidences of debt, and it is a false economic principle to issue 
currency on such a basis. Moreover, it is costly for the 
Government, for it practically and permanently prevents it, 
in the interest of the national banks, from redeeming the 
bonds deposited to secure national bank notes, out of its sur- 
plus income. Still it has great merit in giving us a safe and 
sound bank currency. Ultimately this system, born of the 
civil war, will be superseded by a better one, but this will 
doubtless be done in a manner which will not interfere with 
or impair vested interests. 

Owing to the short time now left of this session of Con- 
gress, nothing more than the " Aldrich " bill can possibly be 
enacted at this time. Its simplicity is a recommendation to 
Congress. But, nevertheless, Congress should later pass a 
permanent currency bill, a bill which will settle every ques- 
tion as to the finances of the nation, at once and for a cen- 
tury to come. Such a bill is possible, and in fact it would 
be the simplest kind of measure for the Government to adopt 
— one to provide for just the kind of currency, and the 
amount of currency the business of the nation, the banks, 
and the people should have; one to provide for a perfectly 
elastic currency without creating the slightest depreciation 
of money or danger of loss to banks or Government. It 
should provide a perfect way of obtaining money to move the 
crops, and furnish an all-sufficient means of preventing or 
breaking panics. It should make the money of the United 
States still more current and acceptable in all parts of the 
wf>rld. This would make the nation greater in the eyes of 
other nations, and give the United States Treasury a proper 
command of the commerce and finances of the world, within 
ten years after being put into operation. 

All the Government need do to effect such change in the 
finances of the country, and to acquire all such advantages 
for the Government and the people, in my opinion, is to wipe 



978 THE FINANCIAL AND TRADE SITUATION. 

out the whole system of National Bank Currency, and give 
such banks, or any banks, Government currency direct, upon 
the same securities and such other kinds of securities as the 
Government is willing to accept, and permit the banks to 
increase or diminish the amount it obtains whenever the 
business of the banks requires it; every bank to do no more 
than give sufficient security for the money. The Govern- 
ment need do no more than to take the security and hand 
the bank the money. The Government should be paid for 
the use of the money a low rate of interest, say one per cent. 
No bank should be required to pay more. 

The credit of the Government will be all sufficient for the 
credit of the currency, and every dollar of it would be per- 
fectly secured by the security given the Government for it 
by the banks. The issuing of the money by the Government 
under this system would not injure the credit of the Govern- 
ment in the slightest degree. Banks should be allowed to 
increase or diminish the amount of money they obtain in 
amounts which can be decided by the law. Such a system 
Would be satisfactory to all the people, except the national 
banks. These banks have been given the privilege of having 
their names on the money they issue long enough. The 
money of the banks has ever been Government money. The 
Government has promised to pay it if the banks did not, and 
has had the means of paying. Let the Government do as it 
should: issue all the money. Let it be circulated by banks 
which give proper security for it. Enlarge the means of se- 
curing the Government, by accepting State and Municipal 
bonds, or even Railroad bonds, to the extent of say 50 per 
cent, and Government bonds for the other 50 per cent. 

The amount of additional business this change in the 
finances of the country would make the Government, would 
be no greater than any other change would make, and would 
be much less than what will be necessary if the present bill 
before the Senate is passed. All the great work and expense 
of settling up the affairs of broken national banks and pay- 
ing off their notes will be stopped. 



THE FINANCIAL AND TRADE SITUATION. 979 

There would be no such things then for the Government 
to settle. The Treasury can be required by the law to keep 
all the curreney issued for the purpose, that may be taken 
up, distinct and separate from all Treasury receipts from 
other sources. 

The severity of the panic ordeal of 1907 that the New 
York banks passed through was reflected in the issue to them 
by the New York Clearing House, on and after October 22d, 
of, in all, a hundred millions of loan certificates, although 
the largest amount of these outstanding at any one time was 
eighty-four millions. This form of banking relief is purely 
American and has never been adopted in ' Europe. The 
maximum issue of Clearing House loan certificates in the 
panic of 1893 was $41,690,000, and in the panic of 1873 
$26,565,000. But in 1893 New York bank deposits were 
only $400,000,000; in 1907 they were $1,050,000,000, ex- 
clusive of Trust Companies. The maximum of certificates 
in 19.07 was reached in the third week of November, but the 
Clearing House banks showed their largest deficit in reserve 
— $54,100,000 — in the first week in November. Simultane- 
ously the loan certificates issued by the Boston Clearing 
House reached their largest aggregate, $11,995,000. It is 
noteworthy also that three powerful New York banks then 
held one-third of all the loan certificates issued by the New 
York Clearing House. One of these held $13,500,000; an- 
other $10,000,000; and the third $7,500,000. The obvious 
object of this was to enable the strong banks to loan a part 
of their cash reserves to weak associates. 

The Clearing House Committee and the New York banks 
individually and collectively did splendid work in mitigating 
as far as possible the effects of the panic, while the Secretary 
of the Treasury, Mr. Cortelyou, rendered very valuable 
service by co-operating with the national banks to reduce the 
monetary stringency through large Treasury deposits and 
facilitating the importation of gold. 

Mr. Morgan and several other private bankers also ren- 
dered praiseworthy service during the panic, and my firm did 



980 THE FINANCIAL AND TRADE SITUATION. 

its part by loaning to the members of the Stock Exchange, 
at the most critical period, three million dollars at moderate 
rates of interest. 

The New York Clearing House is a non-incorporated as- 
sociation, but its reserve is the foundation for an enormous 
amount of the country's commercial credit. Of course, the 
banks and others holding practically unsalable collateral for 
loans, that the borrowers were unable to repay, were forced 
to help the borrowers and save themselves from loss by con- 
tinuing to hold them through the crisis for a better market. 
There were many cases of this kind, particularly among the 
Trust Companies, and there has been much slow and careful 
after-panic liquidation of such collateral, and much of it has 
still to be done. It is, however, being facilitated by the de- 
cided improvement that has taken place in the market for 
first-class bonds. 

Capitalists who for the past two or three years had been 
dissatisfied with the returns of ordinary investments and who 
had gone into hazardous speculations and extensive under- 
writing of new bond issues in the hope of large and quick 
profits, have been sobered by their heavy losses and are now 
seeking safety in prime investment bonds. 

Had the market for bonds not improved as it has, it would 
have been practically impossible for the New York Central 
and other Railway Companies to have marketed the large 
amount of notes they have succeeded in selling since the 
beginning of this year. The after effects of the panic, as 
well as the panic itself, would also have been far worse than 
anything we have witnessed had it not been for the previous 
heavy stock-market liquidation, a liquidation that in many 
cases had been practically continuous from the end of 1906, 
and that was most drastic and disastrous in August, 1907. 

That the banking situation has become normal is indicated 
by the elimination of loan certificates and the resumption of 
normal methods by all the Clearing Houses in the United 
States, and particularly by the resumption of the weekly de- 
tailed bank statements by the New York Clearing House. 



THE FINANCIAL AND TRADE SITUATION. 981 

This occurred on February 8th for the first time after their 
suspension on October 26, 1907, and was supplemented by 
statements of the non-Clearing House banks and Trust Com- 
panies, including actual as well as average conditions. This 
last is a new and commendable feature, which every Satur- 
day will enable us to learn how all the banking institutions 
in Eew York City and its several boroughs stand, both indi- 
vidually and collectively, in their average and their actual 
condition. 

That we are assured of a superabundance of money at low 
rates of interest is evident from the large and growing ac- 
cumulations of surplus funds in the banks from Maine to 
California, and the light demand. All the indications favor 
a protracted period of extreme ease in the money market, 
modified only by gold exports and the withdrawal by the 
Government, from time to time, of some and probably a 
large part of its deposits in national banks. This again re- 
minds us that the Sub-Treasury system makes the Govern- 
ment an unlimited hoarder of money, with only evil results. 
This, alone, calls for its modification. 

But while the large aggregate of the surplus funds of the 
banks testifies to the return of confidence, and with it the 
return to banking channels of hoarded money, it also reflects 
the dullness of trade and much idle machinery and unem- 
ployed labor. Hence the bank clearings of the United States 
in January were twenty-five per cent less than in January, 
1907. This condition of affairs has been and still is severely 
felt by the Railways, whose largely reduced gross and net 
earnings and long lines of empty cars tell why a number of 
them, like many industrial corporations, have reduced or 
passed their dividends, or paid them in scrip. More railway 
and industrial corporations will probably have to accommo- 
date themselves to circumstances and do likewise in conse- 
quence of reduced earnings. That we expect, and are pre- 
pared for, while the trade depression lasts, and hence we all 
hope and trust it will be short. 

Meanwhile we cannot ignore the political situation in this 



982 THE FINANCIAL AND TRADE SITUATION. 

Presidential year, and the disturbing and depressing effect 
of the recent message of President Roosevelt to Congress, with 
its onslaught on Wall Street, followed by the unjust bitter 
attack of Mr. Bryan on Stock Exchange speculation, which 
he denounced as gambling. Wall Street was thus ground 
between the upper and nether millstones of the Republican 
and the Democratic parties; it was fired on from both sides 
with hot shot, grape and canister, without any good reason. 

Speculation in stocks, as conducted through Stock Ex- 
change brokers, is no more gambling than speculation in real 
estate or ordinary merchandise. All trade is more or less 
speculative because it involves risks. If it did not involve 
risk there would not be so many mercantile failures as there 
are every year, yet no one calls trade gambling. Every time 
a merchant buys a line of goods, he makes a venture, not 
knowing whether they will rise or depreciate in market value 
on his hands. He buys also on credit, just as he gives credit 
to his customers; and what is the difference in principle be- 
tween this form of credit and the credit a stock broker gives 
his customers who pay ten per cent on the par value of their 
purchases while the broker provides the balance and holds 
the stocks as security? This is the margin, which is a credit 
in the account of each of them ; and I call it a credit instead 
of a margin, which is a better word for brokers to use. 

The present anti-speculation crusade is accompanied by 
many delusions and very imperfect ideas concerning the con- 
ditions and equities of business operations. Who is to de- 
cide which are speculative transactions and which are not? 
Business cannot be conducted without making contracts en- 
tering into the future, and that is speculation. The builder 
who contracts to build you a home is a speculator ; the manu- 
facturer who agrees to deliver a thousand cases of cotton 
goods sixty days hence is dealing in futures, and all opera- 
tions extending into the future are unavoidably of a specu- 
lative character. Even marriage is often called a lottery. 
It is quite impossible and thoroughly stupid to try to elini- 
inate speculation, for it is an essential element in all business 



THE FINANCIAL AND TRADE SITUATION. 983 

transactions, except those for cash. If business were reduced 
to the latter basis, it would soon become injuriously re- 
stricted and more exposed to corners and violent fluctuations 
than ever. 

As to legitimate or illegitimate speculation, who is to de- 
cide between the two, and where is the line to be drawn? 
If the investor buys securities in advance of his income, 
expecting to complete the purchase later on, is that legiti- 
mate? Suppose circumstances compel him to change his 
mind and sell before his original purchase is completed, is 
that legitimate? And in what respect does such a transac- 
tion differ from the ordinary marginal contract ? It may, 
perhaps, differ in intent ; for the speculator usually buys with 
a view to taking advantage of temporary fluctuations. Yet, 
who would be bold enough to investigate the intentions of 
buyers or sellers ? Only the most drastic kind of force could 
compel divulgence of such secrets, and is it possible to 
establish any such system of espionage in this country? 
Speculation, as often stated in these advices, when confined 
to reasonable limits is beneficial. It is the natural balance 
wheel of commerce and finance. By its means and through 
the conflict of opinion between buyers and sellers real values 
are established by simpler and more reliable means than by 
any other known methods. ~No Government investigation 
will ever ascertain the real value of our railroads so well as 
the higgling and bargaining between buyers and sellers, 
which is alike the moving spirit of commerce and the arbiter 
of values on all Stock Exchanges the world over. Specula- 
tion is liable to be carried to excess, and abuses in specu- 
lative methods undoubtedly exist; but these are better cor- 
rected by a strong and elevated public opinion than through 
any legal measures based upon political claptrap. There is 
a flood of nonsense in this campaign against speculation, anti- 
option, etc., which does not find believers here but may in 
other parts of the country. It consists very largely of po- 
litical humbug, and is nothing more than one of the usual 
methods by which crafty politicians play upon the ignorance 



984 THE FINANCIAL AND TRADE SITUATION. 

and prejudice of the masses for their own advantage. After 
the elections this mania will probably pass away, to be then 
recognized as one of the psychological features usually fol- 
lowing a panic. Previous instances of this sort of agitation 
were the granger and populist movement, which exhibited 
many of the present symptoms of political insanity. Never- 
theless, such agitation may do serious harm, and its fallacies 
should be fearlessly exposed in order to prevent the people 
from being deceived and misled. Even now this agitation, 
especially as manifested in hostile State Legislatures, is 
seriously interfering with that restoration of confidence that 
is absolutely necessary to business recovery. It is keeping 
both capital and labor idle. Capital is proverbially timid, 
and until such attacks cease enterprise is sure to be more or 
less repressed. Of course there are abuses that need rectify- 
ing, but it is folly to carry restraint to the point of extinc- 
tion. Because a few individuals play golf to harmful excess, 
would any sane person suppress so wholesome a sport? Yet 
that is precisely the policy of many of the reformers of 
the present day.; Too frequently these reform movements 
savor of ignorance. Their purpose is frequently admira- 
ble; but the country sadly needs more sanity in their 
application. 

President Roosevelt condemns " options " very vigor- 
ously, as if they were now dealt in on the Stock Exchange, 
as they once were, ranging from three to sixty days; but 
they have not been traded in there for many years, all pur- 
chases and sales of stock being deliverable and receivable on 
the day following the transactions on the floor of the Ex- 
change, except those specifically for " cash," which means, 
to be delivered and received the same day. But on the Cot- 
ton, Produce and Coffee Exchanges, and Chicago Board of 
Trade, nearly all the transactions are in " futures " — and 
these are a boon to cotton and grain growers and coffee im- 
porters, who, through them, can sell their growing crops and 
importations months before they actually possess and are 
ready to deliver them, so in advance making sure of the 



THE FINANCIAL AND TRADE SITUATION. - 985 

prices they will get for their farm products and importa- 
tions. 

This is speculation, yet perfectly legitimate, and I think 
that if President Roosevelt and Mr. Bryan knew more about 
these markets and the N. Y. Stock Exchange from actual 
experience, they would see the injustice of much that they 
have said in decrying the evils of speculation. Black sheep 
and exceptional wrongdoing should not be held up as ex- 
amples of all and everything in "Wall Street; and because 
unscrupulous men sometimes embezzle in order to get money 
to speculate with, Wall Street should not be held responsible 
for their crime, any more than a river should be blamed for 
a man's suicide because he jumps into it to end his troubles. 
There is nothing illegal or against public welfare in a broker 
buying and selling stocks and bonds for his customers in 
conformity with the rules of the N. Y. Stock Exchange, nor 
can there ever be; and I know that such business is just as 
honorable and legitimate as the buying and selling of iron, 
dry goods or real estate on credit. It is credit that keeps 
alive the business world. 

The attacks on the financial center of this country are in- 
discriminate, and I am sorry that President Roosevelt, who 
has done so much good in other respects, should have nipped 
the bud of reviving confidence in the stock market in the 
way he did, for his denunciation of Wall Street, coupled 
with Mr. Bryan's wholesale and wild condemnation of the 
Stock Exchange, led to a renewal of liquidation in the stock 
market, and a fresh decline in prices through creating fresh 
distrust of their holdings among investors. 

The New York Stock Exchange is a great national and 
international market, and its 1100 members compose a very 
honorable and wealthy body of men, whose integrity in all 
their business transactions is unquestioned. They are bound 
not only by the rules of the Stock Exchange to be absolutely 
honorable and strictly honest in their dealings, but their own 
interests and their relations with their fellow members and 
their customers compel them to be so, and to be also above 



986 THE FINANCIAL AND TRADE SITUATION. 

suspicion. Summary punishment, even to expulsion from 
membership, would follow any dishonorable or dishonest act 
on the part of any of them, and such instances are of ex- 
tremely rare occurrence. It is therefore unjust to stigmatize 
these men, these bankers and brokers of good business 
standing and good social position, in the manner they have 
been stigmatized recently by Mr. Bryan; and again I think 
that if he knew Wall Street better than he does he would 
have been more discriminating, and would have confined his 
severest criticism to the speculative capitalists who have 
probably at times abused the Stock Exchange by the manipu- 
lation of stocks. 

The so-called practice of " washing " is strictly prohibited 
by the rules of the Stock Exchange, but as it is very hard to 
detect and prove, in some instances, doubtless it may possibly 
have gone unpunished. The Stock Exchange, however, ear- 
nestly endeavors to ferret out and prevent and severely pun- 
ish all violations of its rules. 

After every great panic, the Stock Exchange has been 
made a scape-goat, and unjustly assailed as the main cause 
of the trouble. The fact however that the two great oppos- 
ing forces in national politics are now united in their attacks 
upon Wall Street is unusual, and foreshadows more attacks 
of the same disturbing character during the presidential cam- 
paign. This is a depressing factor in both the financial and 
trade situation, and we see evidence of it in all directions. 
It is, of course, a factor that retards recovery from the crisis 
by retarding the growth of confidence, and how far its in- 
fluence will extend we have yet to see. But of one thing we 
may be sure, and that is, we shall be reminded of it very 
forcibly from time to time from the batteries on both sides 
of the political battle ground until after the November elec- 
tion; then the guns will cease to belch their thunder. Hence 
we must be prepared for it in the interval and make the best 
of it, remembering the old adage — " Forewarned, Fore- 
armed." But never before has politics hurled its javelins so 
fiercely against Wall Street, and that practically means all 



THE FINANCIAL AND TRADE SITUATION. 987 

the Stock Exchanges in the country. The joint attack is 
against stock speculation, and no Stock Exchange in the 
world ever was or ever can be free from that. It would ob- 
viously be absolutely impossible to distinguish investment 
from speculative transactions on the floor of the Stock Ex- 
change, or tell whether long or short stock was being bought 
and sold. Because speculative capitalists in control of large 
corporations have managed them dishonestly for their own 
benefit, and in furthering their schemes and speculations 
employed stock brokers and used the Stock Exchange, it and 
its members should not be held responsible for the wrong- 
doing of these men, as it is a market open to all the world, 
just as is the London Stock Exchange or any Bourse in Con- 
tinental Europe. To restrict its scope and operations by law 
would be to lessen its usefulness to investors and corpora- 
tions issuing securities, and destroy its utility as a free mar- 
ket for all. 

Wall Street being not only a local but a national and in- 
ternational financial center, the whole world, not only the 
whole country, is tributary to it, and it is indispensable to 
the whole country. Yet it is made the target at present for 
all sorts of political abuse, and various schemes have been 
urged for suppressing trading in stocks, all of which are of 
course chimerical, for as long as we have securities, there 
must, in justice to the millions of holders, be a market for 
them. Without it there would be a sort of chaos of con- 
fusion and abnormal prices, for it is the speculator who is 
often the most keen and discriminating in judging the true 
value of securities. The much maligned " bear " is the 
safety valve of the market. He often prevents the manipu- 
lation of the price of a stock to an unfairly high figure by 
exposing the weak points in the situation, which is a protec- 
tion to a prospective buyer. 

A great deal of shallow abuse is still being showered on 
the Stock Exchange from all parts of the country. This al- 
ways follows a panic. It pleases a certain class of ignorant 
and misguided people to hear Wall Street denounced and 



988 THE FINANCIAL AND TRADE SITUATION. 

maligned on every opportunity. It matters little whether 
the accusations are right or wrong. So pessimistic is public 
opinion that the worse the charges the more numerous the 
believers. No one looks on the other side; no one is told of 
the manifold services and advantages of Wall Street as a 
financial center. No one is taught that Wall Street is merely 
a central market for capital, just as Chicago is for wheat, 
Boston for wool, New Orleans for cotton, etc. How many 
appreciate the fact that Wall Street is as essential to the 
business life of the country as is the Legislature at Washing- 
ton to our political life? How many realize that Wall Street 
is the primary nerve center of the American business world; 
that a blow struck there is an injury to the whole financial 
and business fabric of the nation? How many forget that 
in Wall Street the investor can deal with greater advantage 
to himself, as a rule, than in any other financial market? 
How many understand that there the country can best settle 
its accounts; send its savings, and make its investments more 
readily and on better terms than anywhere else? The very 
individuals who most violently abuse Wall Street are often 
among the first to go there for financing new enterprises or 
to pick up cheap investments. Thither, also, these same 
grumblers hasten in order to " get rich quickly." When 
they succeed nothing is heard about the " wickedness " of 
Wall Street, and they flatter themselves as to their own su- 
perior shrewdness. But when these same individuals lose, 
then Wall Street is nothing but a " gambling hell and a cess- 
pool of iniquity." They fail to recognize that their losses 
are the result of their own cupidity, or inability to discrim- 
inate between sound and unsound investments. They usu- 
ally lose because of their own bad judgment; but neverthe- 
less, there is no end to their objurgations. 

Now Wall Street after all is little different from any other 
department of business and industry. Its make-up naturally 
includes men with similar failings and similar impulses to 
good and evil that exist everywhere; men who are better 
than the politicians who make capital by abusing Wall 



THE FINANCIAL AND TRADE SITUATION. 989 

Street; men who are better than some of the trusts or the 
unions which aim to selfishly and often relentlessly grasp all 
within their power. It may also include a very few who 
unscrupulously manipulate property for their own advan- 
tage and at every opportunity. But it also includes a vast 
majority of men of high principles, of great foresight and of 
enlightened self-interest; men who recognize that their own 
welfare is dependent upon their regard for the welfare of 
others. Most of such men are rarely heard of, and their 
good deeds and honorable achievements are not exploited in 
the daily press, which is naturally interested in the search 
for the abnormal^ Wall Street probably contains a much 
larger percentage of strong brainy men than any other com- 
munity, because right there centers the management of large 
affairs and great organizations which demand the highest 
ability. True, Wall Street attracts some men of unscrupu- 
lous and predatory instincts because of the great opportuni- 
ties for accumulating wealth by devious and often improper 
methods. The occasional flotation of questionable schemes 
and the improper use of funds held in trust undoubtedly are 
sometimes among the greatest evils connected with Wall 
Street. They are evils that its best men are most anxious to 
see eliminated, and it is satisfactory to know that strong 
efforts are being made in this direction. It cannot be too 
strongly stated that many of the abuses which aggravated 
the late panic could not be repeated, and have been stopped 
forever. Whatever defects remain, the business standards 
of Wall Street are upon a distinctly higher plane than ex- 
isted some time ago. In spite of troubles and pessimism the 
world is growing better and better. But so long as fools with 
money are to be found, just so long will there be sharpers 
ready to take the one and leave the other. It is useless to 
expect the millennium. Human nature changes slowly, and 
the only means of checking abuses is to establish rules and 
standards of a high order, and to keep alive a public opinion 
that will insist upon their enforcement. An alert and vigor- 
ous public opinion is often more effective in preventing evil 



990 THE FINANCIAL AND TRADE SITUATION. 

than the punitive measures which are applied after the 
wrong has been done. 

]$o king, on being crowned, was ever prouder or happier 
than I, when I first stepped on the floor of the New York 
Stock Exchange as a newly elected member. The pride that 
I felt at that time has grown and increased every year since 
that day, so long ago, as I have seen the Exchange grow in 
influence and moral power. There is no body of men in the 
world superior to the members of our Exchange in honor, 
integrity and truthfulness. Every transaction on the floor 
is done on word of mouth. Sales involving millions of dol- 
lars are consummated without a scrap of writing, and it is a 
rare occurrence that even a dispute arises over a transaction, 
and even then, unless a witness can be found to the transac- 
tion, the matter is settled usually by each party assuming 
one-half the loss, as both the buyer and the seller know that 
the other is just as square and honest as he is, and that the 
dispute is over a misunderstanding and not a misrepresenta- 
tion. Many people are wont to worry over the nervous 
strain under which their friends in the Stock Exchange are 
laboring in busy times. Their worry is unnecessary, as the 
busy time on the " Street " is the happy time. Many people 
pretend to be shocked at the want of dignity which prompts 
the members to skylark and act like boys. Don't be shocked. 
This is the recreation which offsets the strain and keeps the 
members young. One of the most impressive scenes that can 
be witnessed is viewed from the gallery on the morning of a 
very busy day. At five minutes to 10 the members are seen 
quietly gathering in little groups around the different 
" posts," chatting and smiling — at 10 o'clock exactly a gong 
sounds which announces that business can begin. Every 
man on the floor commences to yell and paw the air, and one 
who did not understand would think that he was watching 
the working room of bedlam. But if he watches closely he 
will see that order reigns in seeming chaos. Automatic sig- 
nals on the walls, quickly moving pages and telephone clerks 
in the booths at the side of the Exchange room, all work in 



THE FINANCIAL AND TRADE SITUATION. 991 

harmony, and the great machinery " moves in a mysterious 
way its wonders to perform." Almost everything in the 
country, yes in the world, has its influence in this great mar- 
ket. The grains of wheat, the kernels of corn, the bolls of 
cotton, the chinch bug and the boll weevil: each has a vote. 
The miner deep in the bowels of the earth and the crew on 
a swiftly moving railroad train, the track walker and the 
laborer are all exercising indirectly an influence. AH the 
great railroads and industrial corporations come to Wall 
Street in their time of need, and if their object is worthy 
they do not leave with their wants unsupplied. Wall Street 
proper, as represented through the New York Stock Ex- 
change, is the barometer of the country. Every man, woman 
or child who has a dollar invested or deposited in a savings 
bank is interested in the good or bad times which prevail in 
the Street. In times of great disaster or need, the members 
of the Exchange are the leaders in contributing to the relief 
of the afflicted. There is a lot of good in Wall Street that 
outsiders know nothing of; if you are one of them, find out 
the truth. Be sure to hear witnesses on both sides. Honor 
and truthfulness are the cornerstones on which the whole 
fabric of business in Wall Street is built, and confidence is 
the keystone of the arch that covers all transactions. The 
fact that a weak spot is occasionally uncovered proves the 
strength of the general structure. There is no place in the 
world where the measure of confidence between employer 
and employee is so large and where loyalty to each other is 
so marked. In whatever business a young man intends to 
embark, a year or two in Wall Street is a good training, as 
he will learn much that will benefit him in after life. He 
would realize the necessity of close attention to work and 
the true application of the principles of the Golden Kule. 
In these times of reckless denunciation of Wall Street a gen- 
eral application of this rule by those who attack by innuendo 
and without a scintilla of truth would help to restore confi- 
dence and give evidence of fair-mindedness on their part. 
Men in high places prefer charges and the very wording of 



992 THE FINANCIAL AND TRADE SITUATION. 

their complaint proves that they are beyond the depth of 
their knowledge. Wall Street will survive all attacks, and 
the refutation of these attacks by well-meaning but mistaken 
men will in the long run redound to its lasting good. This 
is a time of trial by fire in both business and private life, and 
those who have nothing to fear will come out of it unscathed, 
and the New York Stock Exchange will be in the front rank 
of those declared guiltless and worthy. 

Possibly there are a few abuses undiscovered on the Stock 
Exchange that should be remedied. Nevertheless, I affirm 
without fear of contradiction that there is no business insti- 
tution in the United States where standards are as high or 
where the integrity of its members is equal to that prevailing 
on the Stock Exchange. Therefore, let the people and our 
Legislatures come to their senses, and awake to the fact that 
in striking at the financial district they are hurting them- 
selves quite as much as those whom they seek to destroy, and 
that the evil transactions are small in comparison with the 
good. Let them understand that in fomenting discontent of 
this sort they are intensifying the general depression, adding 
to the number of unemployed, driving capital into hiding 
and generally interfering with that recovery in commerce 
and industry which is now so earnestly desired. The present 
antipathy to Wall Street savors largely of public hysteria, 
bogyphobia and political dementia. Apparently, it is a dis- 
ease which must run its course ; if so, the best cure will be a 
period of reflection in which to cultivate calmer and more 
rational views. 

At the same time that Wall Street is being riddled with 
hot shot, the railways are being harassed by State legisla- 
tion, involving low rates, and projects are on foot that in 
effect would prevent their development to meet the wants 
of the people. All this is oppressive and inimical to the na- 
tional welfare, and I advocate as a remedy removing the 
interstate railways from the control of the States, and plac- 
ing them entirely under the control of the United States 
Government. This Congress can and should do promptly. 



THE FINANCIAL AND TRADE SITUATION. 993 

Another great difficulty the railways and other large em- 
ployers of labor now have to contend with is the refusal or 
unwillingness of the Labor Unions to consent to a reduction 
of wages to meet reduced earnings. A lowering of wages 
has become absolutely necessary, for they are still at the 
high figures to which they were pushed during the long 
period of prosperity. They are at a boom level that railway 
and manufacturing corporations cannot afford to pay in these 
altered times. The Labor Unions should recognize this at 
once, and reduce their wage scales, and not wait until they 
are forced to yield. Moreover, they should see that with re- 
duced wages a larger number of men could be profitably em- 
ployed than is possible with wages as they are, and in this 
way the ranks of the unemployed would be reduced. This 
of itself would be of great benefit to both the working men 
and their employers, as well as to the country at large. It 
is a time when common sense should be brought into play in 
the adjustment of means to ends in wages as well as other 
matters, for the more it is the quicker will be recovery from 
the effects of the panic, and the less will be the suffering 
from industrial depression by labor as well as capital. This 
in the concrete means that it would result in there being 
fewer workmen in actual want, and fewer corporations going 
to the wall. It is one of the great remedies that the situa- 
tion now calls for. 

A general reduction of wages would to almost a certainty 
cause some mills that have closed to reopen, and cause others 
that are running on part time to run on full time. The ad- 
vent of Spring will of course tend to stimulate recovery, so 
we shall have the help of Nature to repair damages. With 
Nature as an ally, we ought to rapidly overcome all obstacles 
in the way of complete recuperation. 

Readjustment of existing conditions is the order of the 
day, and where there's a will there's a way, as we all know. 
The general reduction that has taken place in the price of 
commodities, and to some extent in rents, furnishes a very 
good reason of itself why wages should be reduced from the 



994 THE FINANCIAL AND TRADE SITUATION. 

high points to which they climbed to meet high prices. As 
it is, the inequality between wages and prices is very con- 
spicuous, and equality should be restored as quickly as pos- 
sible. Equality is another name for justice. It is also the 
touchstone of taxation. Workmen should not forget that 
even half a loaf is better than no bread, and that by accept- 
ing reduced wages they are paving the way to better times 
for themselves as well as for the country. Then, too, they 
owe a duty to society at large. No one should be governed 
by the narrow, selfish policy of living for himself alone. 
This is a world in which we must give and take, and labor 
and capital have mutual interests. 

The decline in commodity prices, that were before ex- 
cessive, has been salutary and of vast benefit in bringing the 
necessaries of life within easier reach of the wage-earning 
masses, and in preventing many industries from going from 
bad to worse, through cheapening their supplies of raw ma- 
terial. The people generally, as consumers, benefit by this 
reduction in the cost of production, and in turn it tends to 
increase consumption and quicken trade and manufacturing 
enterprise. All these influences, too, tend to strengthen con- 
fidence in the situation and hope for the future. But the 
over-trading, extravagance and excessive speculation that 
primarily led to the panic should be carefully guarded 
against in the future. 

The very severe and extensive liquidation that we have 
witnessed, not only in Wall Street but all over the country, 
has made the financial situation sounder and therefore safer 
than it has been for several years, for it must be confessed 
that many of our speculative captains of industry and finance 
passed far beyond the bounds of conservatism in their opera- 
tions, and invited the crisis we experienced by their reckless 
assumption of inordinate risks and liabilities. 

It was a fitting retribution when some of them were en- 
gulfed by it. Especially culpable and dangerous to the pub- 
lic were those speculative capitalists who sought and gained 
control of chains of important national banks, and then used 



THE FINANCIAL AND TRADE SITUATION. 995 

their resources to extend their own hazardous speculative 
schemes. These men were really the immediate cause of the 
crisis, and they are now deservedly paying the penalty for it. 
But this is a small consideration in comparison with the 
enormous amount of havoc they created. One good thing, 
however, has come out of so much evil, and that is improve- 
ment in our banking condition, by the exposure and eradi- 
cation of this unsound banking that prevailed in New York, 
and to some extent elsewhere. 

We shall, in this generation at least, have no more such 
speculators stepping into control of large New York banks 
and using them pretty much as if they, their assets and de- 
posits, were their own property. Those responsible for this 
unsound banking were public enemies, and we are still feel- 
ing the effects of their reckless and illegal proceedings. The 
fact that several of them are now under indictment for their 
offences is a reminder that the way of the transgressor is 
hard. Their elimination from the banking world removed 
a source of great danger, which might, if allowed to continue 
longer, have resulted in a far worse state of things than they 
actually created before their career was brought to a close. 

A salutary effect of the panic is the check it has given to 
extravagance and waste in living expenses, and the practical 
lesson in economy that it has taught very many, for economy 
is wealth. To reduce expenses after business reverses is the 
best way to recuperate, and a little adversity is not without 
its uses among us, for we are beyond question the most ex- 
travagant people in the world. This extravagance in living 
has been the prime cause of much of the " graft " evil that 
has lowered the tone of our business and political life, to say 
nothing of abuses of power, embezzlements, corporation- 
looting, and other forms of dishonesty. 

President Roosevelt in his war against illegal and dishon- 
est corporate practices has certainly worked for the good of 
the country and to raise the standard of business morality; 
and the life insurance, railway and other corporate scandals 
that we are all familiar with have shown how much reform 



996 THE FINANCIAL AND TRADE SITUATION. 

and purification were needed even in high places. Let us 
never forget, as the Bible tells us, that " Kighteousness ex- 
alteth a nation " however great may be its material pros- 
perity. 

That there is a very large amount of money lying idle and 
available for investment in first-class bonds was conspicu- 
ously shown by the result of the sale by the City of New 
York on February 14th of fifty millions of four and a half 
per cent bonds, when three hundred millions were bid for, 
at an average price of about 104f . This oversubscription of 
six times the amount offered came from people who would 
not have touched any but gilt-edge securities. 

Of course, the present cheapness of money accounts for 
much of this large New York subscription, as apart from in- 
vestors, banks and bankers are seeking safe employment for 
their surplus, in securities that can be promptly marketed 
on the Stock Exchange whenever necessary. The latter is 
an indispensable condition with them, particularly now in 
view of the national banks being enormously indebted to the 
Government in the shape of Treasury deposits, and also in 
view of the future needs of the Government calling for their 
return. This is already giving a hardening tendency to time 
money* 

Although trade is largely prostrated through inactivity, it 
is safe to say, notwithstanding what is bad in the situation, 
that fundamental conditions are generally sound, and there- 
fore recovery while gradual will be the easier for it. Mean- 
while with inactivity forced upon us, let us be masterly in 
our inactivity, and make a virtue of necessity. There is 
much in knowing when to stop and when to go ahead; when 
to 'bout ship and when to take in sail, and double reef the 
mainsail and the topsails, or heave to, and when to sail under 
bare poles or a full spread of canvas. Skillful navigation is 
necessary to success. 

With regard to bank reserves, it is especially important 
during this period of depression that they should be kept 
exceptionally strong and as much as possible, within reason- 



THE FINANCIAL AND TRADE SITUATION. 997 

able limits, above the required percentage. Twenty-five per 
cent of reserve against deposits in the central reserve cities, 
and especially in New % York, is not always sufficient, as we 
have seen, from time to time, to enable the banks there to 
weather a storm. 

The Bank of England maintains an average reserve of 
nearly twenty-five per cent larger than that; and it is guarded 
from suspension in times of panic by a suspension of the 
bank act by the Government, which allows it to issue its notes 
ad libitum without any compulsory reserve. Here are two 
elements of safety. The stronger in reserve the banks keep 
themselves, the more confidence in them and in the situation 
will be strengthened, and the stronger confidence becomes, 
the more enterprise can build upon it. So the banks by their 
conservatism should do all they can to encourage confidence 
as the prime requisite in recuperation. 

The New York banks, holding as they do largely the re- 
serves of other banks throughout the country, should hold a 
reserve nearer to that of the Bank of England, which is also 
the depository of the reserve of other banks, but in a much 
larger proportion. If the New York banks had held thirty 
per cent reserve last October, when the Knickerbocker Trust 
Company failed, there might have been no necessity for issu- 
ing Clearing House certificates, and in that case there would 
have been no hoarding of money and little or no panic. But 
the banks are naturally desirous of making money by keep- 
ing their loans and discounts at high figures, so they are apt 
to look upon reserves above the legal limit as money wasted. 
The legal limit, however, is too low in the central reserve 
cities. My remedy is to raise it. It ought, in my opinion, 
to be at least thirty per cent instead of twenty-five per cent, 
and apart from any legal requirement, the New York Clear- 
ing House should adopt a rule requiring the banks in the 
Association to keep a reserve of thirty per cent. The banks 
would lose a little in profits by this change, but they would 
gain in safety, and reduce our liability to panics. Their ex- 
perience during the crisis, when for ten weeks, until the end 



998 THE FINANCIAL AND TRADE SITUATION. 

of December, currency loaned at a premium ranging from 
two per cent to five per cent, should make them anxious to 
avoid another such ordeal, and an ounce of prevention is bet- 
ter than a pound of cure. 

One unpleasant part of the aftermath of the panic in New- 
York was the failure in one week, at the end of January, 
notwithstanding that they held &ve millions of loan certifi- 
cates, of four banks belonging to the Clearing House, be- 
cause of runs on their deposits, and the refusal of the Clear- 
ing House to give them further assistance. Whether or not 
any of these will be able to resume is still undetermined. 
Yet, in sharp contrast with the excitement and alarm that 
prevailed for weeks after the Knickerbocker Trust Company 
failed, the public regarded these failures with apathy, and the 
recovery in the stock market which was then in progress, 
chiefly under the covering of short contracts, was not even 
checked by it, so much had sentiment changed in the inter- 
val. These failures had been practically discounted, large 
as they were, by what had gone before, including the decline 
in stocks. Yet collectively they had more than twenty-one 
thousand depositors. These may eventually be paid in full, 
but it is very uncertain when that will be, for the law is a 
slow coach, especially when a permanent receivership is 
fastened upon a bank, largely owing to the long wait usually 
necessary for the conversion of slow assets into cash. More- 
over, the expenses of liquidation eat up a large part of the 
assets under the system of fees for receivers and their coun- 
sel, which have always been much too large for the work 
done, and consequently they involve injustice to the credit- 
ors. Laws should therefore be passed substituting for fees 
fixed rates of compensation, per diem, for both of these, that 
is salaries; and meanwhile the courts should, under the ex- 
isting laws, reduce their fees to reasonable amounts, and so 
correct this evil of extravagance in the cost of liquidation, 
which in some instances has been so excessive as to practi- 
cally amount to robbery of the victims. This is a needed 
remedy that should be urged upon State legislatures. 



THE FINANCIAL AND TRADE SITUATION. 999 

Two of these failed banks are expected to resume within 
six months, while the other two will be wound up, and prob- 
ably pay depositors forty per cent or fifty per cent of their 
claims within about that length of time. 

Very fortunately, however, the crisis of 1907 was much 
less prolific of bank failures than that of either 1873 or 
1893. In 1893 no fewer than one hundred and fifty-eight 
banks suspended, and of these sixty-five went into permanent 
receiverships, while eighty-six resumed within the year, and 
seven later. But few of these banks had a capital of half a 
million or more, their average capitalization being only 
$169,000. The banks generally in the fourteen years inter- 
val had gained immensely in strength as well as in number, 
and their power of resistance to the effects of the crisis, 
when it came, had been correspondingly increased. 

While the profits of trade and manufacturing have been 
dwindling, prophets as to the future of business and prices 
have increased enormously, and they were never more 
numerous or more divided in opinion than they are now. 
Some of them point to the fact that with the single excep- 
tion of steel, in the hands of the United States Steel Cor- 
poration, prices have declined, and they argue that unless 
demand increases they will, like stocks and wages, naturally 
go lower, and that the Steel Corporation will be forced, by 
the reductions already being made by the independent steel 
makers as well as by the heavy decline in iron, to follow 
suit. These also look for somewhat prolonged depression. 
But many other prophets are sanguine that we are already 
seeing the worst of it, and that commodity prices are about 
as low as they are likely to go. The true prophets are prob- 
ably the conservatives who steer between these conflicting 
opinions and avoid both extremes. But whatever may come, 
on the ebbing or rising tide, of our business life, we should, 
as Longfellow says, " Learn to labor and to wait, with a 
heart for any fate," and at the same time hold ourselves 
always ready to make the best of our opportunities as they 
arise, and, as America is pre-eminently rich in opportunities, 



1000 THE FINANCIAL AND TRADE SITUATION. 

we shall not find them waiting long. In any event, the 
wants of eighty-four millions of our people must be supplied, 
and we are the most progressive nation in the world. I 
therefore ask — Who's afraid? 

I am quite of the opinion that the time has arrived for 
calamity howling to cease; there is now no occasion for un- 
due anxiety. Caution, however, may be necessary, especially 
in commercial operations. The worst of the financial depres- 
sion has been seen, and the long-distance view is certainly 
more encouraging than at any time during the last six 
months. Business men have now no reason to feel other- 
wise than confident. I firmly believe that recuperation will 
be quicker after the recent panic than was experienced after 
any of the previous great panics since the one of 1857. 

Now is the time for the timid to develop bravery, for the 
strong to aid the weak, for the ignorant to be willing to learn 
from the wise. Let us all work together for the common 
good, and the upward tide will bear us all along towards 
better times and lasting prosperity. Panics come in cycles 
and it will be years before another one can strike us. Let 
the worker give his best services to his employer. Let the 
employer grant justice and fair pay to the worker and to all, 
and the nightmares and storms of the past year will be for- 
gotten or remembered only as a lesson taught by experience, 
which will serve to teach us not to overdo in the future but 
to temper enterprise with conservatism. 



CHAPTEE LXXXV. 

AMERICAN SOCIAL CONDITIONS.* 

Mr. Chairman and Students of Yale University : 

AS you gentlemen of good old Yale are studying American 
social conditions, I am glad to have the opportunity of 
addressing you, and I congratulate you on the prestige you 
will derive from graduating at so great and famous a uni- 
versity. You are now on the threshold of American citizen- 
ship and have good reason to be proud of the prospect before 
you, with its unlimited possibilities. 

Surely it is a privilege that you all value, and can hardly 
overvalue, that of becoming American citizens, and thus 
forming a part of this free and glorious Republic, where the 
gates of opportunity are thrown wide open to you, and the 
golden harvest of success stands ready to be reaped by the 
worthy and deserving, who are able and willing to do good 
work, and work hard in their chosen calling. I may reason- 
ably predict that some of you will become leaders of thought, 
trade, science, literature or art, and that will be your ample 
reward. I base my prediction on the fact that you are not 
here because you are compelled to be, but because you have a 
thirst for knowledge, for information, or suggestions that 
may be of use to you in this connection, and are willing and 
anxious to work hard to attain what you desire. The first 
requisite to attain success in any form is this willingness 
to study and work for what you want, so, being equipped 
with this necessary quality at the start, you are prepared to 
make headway in the battle of life. 

* An address by Henry Clews, LL.D., to the students of Yale Univer- 
sity, New Haven, Conn., November 1, 1907. 



1002 AMERICAN SOCIAL CONDITIONS. 

The pessimist is abroad in this fair land of ours, in these 
days, preaching the gospel of discontent, and a favorite text 
is that the young man has now no show, or little chance to 
get on in life. Do not be misled or discouraged by such a 
false doctrine. There never was a time when brains were at 
a greater premium than at present, nor courage, education, 
industry, and energy more requisite or in greater demand. 
The harder you have to struggle to complete your education, 
the better fitted you will be for that battle of life, for in 
your youth you will have attained victory over the obstacles 
which lie in the path of success. Disappointments may em- 
barrass you, but you must conquer them, instead of allowing 
them to conquer you. Every victory, thus won, will be an 
incentive to further efforts and achievements, and will pro- 
vide a stepping stone to success. 

Eight here, let me impress upon you that the foundation 
stones of real success in life are industry, honesty, and truth- 
fulness. These are jewels which every man can possess, if 
he cares to. Do not be honest because it pays, or as a matter 
of policy. Be honest because you are conscientious, and it is 
right to be honest and a reproach to be dishonest. A man 
who is honest and truthful in all things is the highest type 
of manhood, and commands respect in every walk of life. 

While you are still young, I advise you to have an ideal. 
Make up your mind what you are best suited for, and strive 
with all that is in you to perfect yourself for the work of 
such a position or profession. While it is the almost univer- 
sal desire to become rich, remember that there are other 
things in life more to be desired than great wealth. Whether 
amassed in Wall Street or elsewhere. Eew of the great au- 
thors, scientists, professors, or inventors have been wealthy 
men, yet they were great public benefactors, and their names 
will live in the pages of history long after the very rich men 
of the world have been forgotten. 

Learn well the history of your country. Study the science 
of Federal, State, and Municipal government. Study also 
finance and banking. Whether you go into Wall Street or 



AMERICAN SOCIAL CONDITIONS. 1003 

not, it will be useful to you. Before you leave Yale, try to 
inform yourselves on all the subjects that will make you 
useful citizens, as well as competent, practical workers. 
School yourselves to be polite and courteous under trying 
circumstances. Politeness is one of the strongest allies one 
can have in his dealings with his fellow-men. It is not only 
so in my field of activity — Wall- Street — but everywhere. 

Read only good books. Libraries are now so plentiful that 
— even if you have not one of your own — good books are 
within the reach of all, and here at Yale you, of course, have 
an embarrassment of riches from the Greek and Latin classics 
to modern literature. 

While you are improving your minds, take good care of 
your bodies. You are not yet too old for me to give you 
points. Exercise all you can in the open air. Cleanliness 
of body, and neatness of dress, even if you are not million- 
aires and your clothes are threadbare, will often be taken as 
a guarantee of good character. Be thrifty and economical, 
even if you cannot equal Russell Sage, and never get into 
debt, if you can help it. 

Strive to learn to do some one thing, in the line of your 
studies, better than anyone else can do it, and you will have 
a specialty to recommend you to a chosen career. Whatever 
you attempt to do, do it with your whole soul — as Mr. Roose- 
velt, our strenuous and gifted President, says : " Buck hard 
and hit the center of the line." 

I have been much impressed with the manual training 
schools, which have recently been established in New York 
City. I wish that manual training could be added to the 
course in every school and college. Mr. Booker Washington 
has ably presented the plan in his Tuskegee Institution, 
where every man to get an education must learn a trade, and 
every man who learns a trade gets an education. It is a 
substantial personal asset for rich or poor. 

Because you live in a city, do not think that the country 
is less attractive, and has no chance to grow like a town. 
The State of Texas alone could give to every man, woman, 



1004 AMERICAN SOCIAL CONDITIONS. 

and child in the United States a full-sized building lot 
20 X 100, and then, allowing for public highways, have over 
one-third of the area of the State left for the production of 
food supplies. The West, the Southwest, and the South, are 
yearning for newcomers. Horace Greeley used to say : " Go 
West, young man ! " The emigrants from foreign shores will 
some day realize that there is a welcome ready for them out- 
side of cities. Colonies will be formed and men of intelli- 
gence will be needed to rule and advise the newcomers ; and 
those of you who can speak a foreign language will be well 
fitted for such a position. But you may aspire to the United 
States Senate, or to become Wall Street millionaires. 

The natural resources of our country are constantly being 
developed, and men of brains and courage will be sought to 
lead the armies of workmen. Every man cannot be a captain 
of industry, but a man of pluck and education need not re- 
main a private in the ranks very long. Still, avoid that 
vaulting ambition that overleaps itself and falls on the other 
side. 

Whatever your calling may be, try to become your own 
master in your younger days. ^Nothing will give you so 
much self-reliance as the habit of relying on yourself. You 
may possibly fail at first, but great successes are often built 
on failures, if the one who fails will profit by the lesson. 
Bulwer Lytton tells us that in the bright lexicon of Youth, 
there is no such word as Fail. 

When you graduate, do not imagine that your education 
is completed. Consider that you are just beginning to be 
able to learn, and that your College life has simply been a 
period of training to put you in condition for the real strug- 
gle for knowledge. Practice makes perfect in all the profes- 
sions. 

See to it that you acquire some new point in knowledge 
every day that will be of future value to you. This will mean 
365 good ideas acquired in a year, and every one of these 
ideas will be like money out at interest, or like seeds planted 
in good soil. They will blossom and bear fruit. 



AMERICAN SOCIAL CONDITIONS. 1005 

Do not believe that all men in politics are rascals, or 
weaklings, who can be bought for a price. If you have the 
inclination, get into political life and be a factor in the af- 
fairs of your district. Honest and truthful men will be most 
welcome in this field, and may be of great public service. 

Do not be worried by the statements made by so many 
pessimists that society, and the country at large, are on the 
verge of moral bankruptcy. I tell you that the world is 
growing better every day, and good men are held in higher 
respect than ever. Of course there are more rascals, and 
more thieves, than there were fifty years ago, but that is 
because there are far more people. The percentage of bad 
to good is relatively smaller. Men who do wrong are found 
out oftener and sooner than they were in the olden days, 
and the news of wrongdoing is carried all over the land by 
telegraph and telephone and published broadcast in the daily 
papers. A hundred years ago a man might commit a crime 
a thousand miles from New York and we could not get the 
news of it in a month, even if it was sent .at all. 

Use all your endeavors to suppress the use of profanity 
or obscenity in public places or elsewhere. This is one of 
the crying evils of the day and our women are never safe 
from the insults of having to listen to talk that would not 
be tolerated in a first-class barroom. But of course the pres- 
ent company is excepted. You are all gentlemen and 
scholars. 

Be cheerful under adverse circumstances. Ella Wheeier 
Wilcox expresses what I mean when she says : 

" It's easy enough to be pleasant, 
When life goes by like a song ; 
But the man worth while 
Is the one who will smile 
When everything goes dead wrong." 

Whenever you see a chance to help a fellow-man who is 
not as well equipped as you are, give him a lift up. If you 
do so, you may forget it, but he never will, and you will 



1006 AMERICAN SOCIAL CONDITIONS. 

secure a friend who will be looking for a chance to do you a 
good turn. 

An old clergyman used to preach that true religion con- 
sisted in doing something good each day, so that when one 
went to bed at night, he could feel that the world was a little 
better, or some one a little happier, because he had lived 
that day. 

Chemistry is going to play the important part in the next 
twenty-five years that electricity has in the past quarter of 
a century. Fortune awaits any man who can make use of 
waste material. Millions of dollars' worth of this is thrown 
away every year because the mind of man has not, as yet, 
been able to solve the problem of utilizing it. Students are 
now at work to this end and who can tell but one of you 
may be the man who will play an important part in this 
great work of discovering new sources of wealth and prog- 
ress. If so, he will find a bigger gold mine than Wall 
Street. 

Railroad magnates are on the watch for improvements and 
devices of any kind that will tend toward saving time, in- 
creasing facilities, lessening liability of accident, or saving 
in cost of construction or equipment. Here is a broad field 
for action and for fertile minds to work in. 

Copper metal is in such demand that the price has re- 
cently been higher than in a generation, namely, twenty-six 
cents a pound, and some cheaper metal may be found to pos- 
sess qualities that will allow it to take the place of copper in 
a degree. 

Surgeons and physicians now perform operations and ef- 
fect cures that would have been considered miracles in my 
younger days, and still we find each year that they have 
much to learn. It is possible that I am now addressing some 
youthful savant, who will startle the world in the distant 
future by still more miraculous skill. 

Wherever you go, whatever you do, keep your eye on the 
star of Hope. Every man has his place in the world if he 
can only find it. Opportunity knocks at every man's door 



AMERICAN SOCIAL CONDITIONS. 1007 

at some time during his early life. Look sharp and secure 
it when it knocks at yours, and grab it before it flies. 

But, to all I would advise that when you have found occu- 
pation, whether it is in the professions, or not, strive to 
please. Don't expect to sit in high places at once. Remem- 
ber that most of you are in the junior class and can only 
graduate to a higher class by merit. Study well your sur- 
roundings and what is ahead of you. Carefully consider 
what may await you. If you see no evidence of a position 
worthy of your hopes, do not hesitate to make a change. It 
is better to change several times while you are young than to 
waste your time by remaining where you cannot expect to 
achieve success. 

One of the fundamental principles of business is that civil- 
ity costs nothing and always pays good dividends, both in 
and out of Wall Street. Very often the temptation will come 
to you in dealing with a nervous or cranky customer or client, 
to give vent to your wrath or impatience. My advice is don't. 
That is also Punch's advice to those about to marry. To 
succeed in holding and pleasing such a customer is a high 
accomplishment, and sure to attract attention. 

The Almighty has endowed every man with two important 
allies, namely, courage and conscience. The latter can be 
blunted if not heeded and an elastic conscience is worse than 
a wooden leg. Be cautious not to enter into any deal or oc- 
cupation when your conscience warns you that you are tread- 
ing on dangerous ground; but, having made up your mind 
that you are in the right, press forward with all the energy 
that is in you. If you do not succeed, have the courage to rise 
and try again and renew the struggle. Nearly every man 
who has made a great success in business life has, in his 
earlier years, suffered reverses. These failures have been 
lessons that have taught him the way to win. You may 
often be temporarily discouraged by seeing success come to 
the dishonest and unworthy, but remember that such cannot 
command the respect of their fellows. There is more in life 
than " filthy lucre," although Wall Street prizes it immense- 



1008 AMERICAN SOCIAL CONDITIONS. 

ly. A contented mind is more to be desired than great riches, 
and, if you are poor, be independently poor. Andrew Car- 
negie says that to die rich is to die disgraced, so guard against 
that. 

You are really now on the threshold of a new school — the 
school of Life. As the old forest guides were taught their 
wood wisdom by the rocks, the streams, the grass, the leaves, 
and kindred objects, so you will learn by actual contact with 
all the customs, rules, and complex situations of the business 
world, what to do and what to avoid. 

Many young men are disheartened before they start in 
business by the fact that so many lines of manufacture are 
controlled by big corporations and trusts. As I have already 
shown, they hear the talk of the agitator and discontented that 
a poor man has no chance in life. Let me repeat that brains 
will always command a premium and that young men who 
have brains, backed by energy, will always be in demand. 
You must prove that you have these requisites, by good work, 
and you will find capital will seek to combine with such 
qualities. You may start in business, or the professions, with 
your feet on the bottom rung of the ladder ; it rests with you 
to acquire the strength to climb to the top. You can do so if 
you have the will and the force to back you. There is always 
plenty of room at the top. The men now at the top have their 
minds and hands full, and are eager to delegate to smart 
assistants some of their work so as to ease the burden they 
bear. Success comes to the man who tries to compel success 
to yield to him. Cassius spoke well to Brutus when he said : 
" The fault is not in our stars, dear Brutus, that we are un- 
derlings, but in our natures." 

Form the habit as soon as you become a money earner, or 
money maker, of saving a part of your salary, or profits. 
Put away one dollar out of every ten you earn. The time 
will come in your lives, when, if you have a little money, 
you can control circumstances; otherwise circumstances will 
control you. You may often have to practice self-denial to 
save ten per cent, of your earnings; but compel yourselves 



AMERICAN SOCIAL CONDITIONS. 1009 

to do so and you will never regret it. Most of the leading 
men in business life to-day started out less well equipped 
with worldly goods or education than any of you. What they 
have done at least some of you can do. 

See that the money you spend is well spent. By careful 
judgment in this respect, you will acquire a habit which will 
cling to you in after life. Many a man makes bad invest- 
ments because he did not learn to be cautious in the begin- 
ning of his business career. 

The improvements in the past quarter of a century have 
been marvelous and the end is not yet. There are many new 
ideas being formulated, and some of you may bear an im- 
portant part in solving problems which will revolutionize 
the world. Electricity and chemistry are perhaps still in 
their infancy, and latent forces are floating around un- 
known to men. The next fifty years may indeed witness 
changes just as great and startling as we have seen during 
the last fifty. 

I once advised young men to go as soon as possible into 
business. I have changed my opinion somewhat and think 
that it is well to get a technical training in a business at 
college where special courses are taught. I still consider, 
however, that if a young man is to enter Wall Street he will 
learn just as much by going into the Street as soon as he 
graduates, and I consider a large office just as good as any 
business college, where a pupil can learn by actual experience 
as well as he could by a theoretical course in a business col- 
lege. Almost every man in a leading position in a banking 
house has started as a junior clerk and gradually worked his 
way up. 

The term " Get the habit " has become quite a metropoli- 
tan by-word and brings me to speak on this subject, for the 
habits we acquire have much to do with our progress, and as 
Lamartine has truly said : 

" Habit with its iron sinews 
Clasps and holds us day by day." 



1010 AMERICAN SOCIAL CONDITIONS. 

In the various matters of detail that make up the sum and 
substance of business — considered as trifles by the foolish, 
but by the wise as important and vital — such as our methods 
of occupation, our time, and our manners, great care should 
be taken to acquire the sterling habits of industry, punctu- 
ality, and sobriety. The most watchful and jealous care 
should ever be exercised by you all in this regard. A single 
deviation from the straight path may mean much, for habit 
is not of sudden acquirement, but is formed (and also lost) 
act by act, thread by thread, as we progress in the journey 
of life. 

If you hold a fiduciary position in a Wall Street banking 
house, or bank, remember that the information you acquire 
regarding the secrets and inside facts of the business of your 
employers belongs to them alone and must not be divulged 
or spoken of to anyone. Very often you will hear of " tips " 
being circulated there as inside information. Never put 
faith in such tips, as an employee who would give away the 
secrets of the firm he works for would be unscrupulous 
enough to lie to you, and I warn you not to make a close 
friend of such a person. Do not think that I look upon you 
as boys in tendering this piece of advice, but rather as a 
veteran addressing new recruits. 

The trait of tenacity of purpose is very often a natural 
gift ; but if you have not this persistence by nature you must 
cultivate it. For, with it, you can succeed, you can make 
difficulties bend, you can make opposition give way, and 
doubt and hesitancy yield to confidence and success. With- 
out it, the more shining qualities of our nature will not 
insure your success, nor avert failure and disaster. 

At the time the Suspension Bridge over the Niagara River 
was to be erected the great question was how to get the cable 
over. A kite was elevated, which, with a favoring wind, 
alighted on the opposite shore. To its insignificant little 
string a cord was attached which was drawn over, then a 
rope, then a larger one, and then a cable; until the great 
bridge between the United States and Canada was completed. 



AMERICAN SOCIAL CONDITIONS. 1011 

First across the gulf we cast 
Kite-borne threads till lines are passed, 
And habit builds the bridge at last. 

In like manner, my friends, our whole character is made 
up of little things, of threads and strands and ropes of habit. 
Let us be sure that they are always good and sound. 

Next to the unwisdom of selecting and following bad or 
incompetent advisers in matters of business, there are also 
certain persons whom, if you wish to do well and make a for- 
tune honestly, you should be careful to avoid. You will not 
always know them by their appearance ; in fact, that is often 
the worst rule to go by, for they are generally well disguised? 
It is in their manner and conversation that you will find 
them out, and, that this be the easier, I have made a col- 
lection of their characteristics, as follows: 

Avoid a man 
Who vilifies his benefactor ; 
Who unjustly accuses others of bad deeds ; 
Who never has a good word for anybody ; 
Who, when he drinks, habitually drinks alone ; 
Who boasts of the superiority of his family ; 
Who talks religion downtown in connection with his 

daily business affairs; 
Who talks recklessly against the virtue of respectable 

women ; 
Who runs in debt with no apparent intention of paying ; 
Who borrows small sums on his note or check dated 

ahead ; 
Who will not work for an honest living ; 
Who looks down upon those who do ; 
Who is always prating about his own virtues ; 
Who imputes bad motives to those trying to do good ; 
Who betrays confidence ; 
Who lies ; 

Who is honest only for policy's sake; 
Who deceives his wife and boasts of it to others ; 



1012 AMERICAN SOCIAL CONDITIONS. 

Who chews tobacco in a public conveyance ; 

Who gets intoxicated in public places ; 

Who partakes of hospitality and talks behind his enter- 
tainer's back ; 

Who borrows money from a friend and then black- 
guards the lender. 

With a population of 85,000,000 people, which this coun- 
try now has, it is easy to find associates in life without se- 
lecting men possessed of any of these characteristics, and life 
is the better worth living without them. 

You will both save and make money by strict observance 
of this short catalogue of men to avoid. You are not called 
upon to do anything or to risk any money in the exercise of 
this discretion. It simply consists in letting such people 
severely alone, and if you have been in the habit of being 
imposed upon by such characters, you will find your happi- 
ness, as well as your cash, greatly increased by prudently 
avoiding them. 

There is another subject of signal importance, to which I 
invite your earnest attention. 

You must ever bear in mind that while, when you become 
citizens, you will possess certain rights and privileges— such 
as the elective franchise and equality before the law — there 
are, as well, sacred obligations and duties imposed upon 
you, as citizens, that should be faithfully regarded and per- 
formed. 

To properly understand and appreciate these duties, you 
should, I reiterate, make a careful study of our system of 
government, and acquaint yourselves with the manner in 
which municipalities, states, and the nation are governed. 

As you mature, attend political meetings and read and dis- 
discuss economic questions of the day; for public discussion 
is one of the best quickeners of individual thought and ex- 
pression. Be prepared, when the time comes, to actively par- 
ticipate in the affairs of your city and state as well as the 
nation, and stand always ready and willing to lend your aid 



AMERICAN SOCIAL CONDITIONS. 1013 

to the uplifting of the government to the highest ideals of 
Democracy, or Republicanism, as you see them. 

If I should add a further word of advice it would be an 
appeal to you to ever cherish, deep in your hearts, undying 
love of country. 

Not only be ready to defend it with your lives; but con- 
stantly cultivate and encourage the inspiring qualities of 
civic pride and virtue, so that your whole future career will 
reflect a sincere and patriotic affection for and just appre- 
ciation of the noble institutions of our great republic. As, 
however, you are doubtless all true patriots this advice may 
be uncalled for. 

Leaving these few precepts with you, I wish to assure you 
that in whatever you may undertake, in banking, trade, 
or the professions, you will have my good wishes for your 
success, and if I have planted in your minds seed that will 
bear good fruit, it will add to the pleasure I have enjoyed 
in addressing you and giving you incidentally, as students 
of American social conditions, my experience of human 
nature, for, in your case particularly, the proper study of 
mankind is Man. 



CHAPTEE LXXXVI. 

♦ THE FINANCIAL AND TRADE SITUATION AND 
PROSPECTS.* 

IN" familiarizing myself with the history, scope, and ob- 
jects of the distinguished organization I have the honor 
to address — The National Association of Cotton Manufac- 
turers — I was impressed by the vast extent and importance 
of the interests it represents through its membership, which 
covers not only New England but the whole manufacturing 
world of the United States, to say nothing of foreign coun- 
tries in which it has a notable representation. 

Such an organization is obviously capable of exerting 
great and lasting power for good in the improvement and 
development of the cotton manufacturing industry in this 
country, and incidentally it cannot fail to benefit all our 
manufacturing interests, for there are ties, visible and in- 
visible, that bind them all together in a bond of mutual 
sympathy. 

How immense these interests are is almost beyond com- 
putation ; but we may form some idea of them from the fact 
that the capital stock of the textile mills, print works and 
bleacheries represented by your Association's own members 
alone, aggregates no less than $334,500,000, without count- 
ing their surplus. 

Your statistics further tell us that in these mills are 17,- 
157,637 spindles, 1,472 sets of woolen and worsted cards, 
5,849 knitting machines, and 67 printing machines. These 
figures are eloquently suggestive of the country's manufac- 

* An address delivered at the Annual Banquet of the National Associa- 
tion of Cotton Manufacturers, at the Hotel Brunswick, Boston, on Thurs- 
day evening, April 16, 1908, by Henry Clews, LL.D. 



FINANCIAL AND TRADE SITUATION AND PROSPECTS. 1015 

turing enterprise and skill, which have kept pace with its 
rapid growth, and the progress of mechanical science. 

Beyond all this, you have $400,075,000 more capital in 
the affiliated manufacturing industries of cotton cloth, cot- 
ton, textile machinery, mill supplies and the like, repre- 
sented by your associate members. This, indeed, is a grand 
exhibit. 

So your association is the representative of $734,586,000 
of capital, a large item in the national wealth of the United 
States. But, great as it is, it will continue to grow with this 
great and ever-growing nation, and with it will come still 
further improvements in mechanical processes, methods and 
machinery, and a far wider foreign market for our manu- 
factures, especially in the Orient and South America, where 
the British and the Germans have dominated trade in the 
past. 

This association in its work for the advancement of cot- 
ton manufacturing interests, and particularly in the promo- 
tion of their commercial relations, and whatever relates to 
improvements in manufacture, is a valuable ally of the 
motive power that turns the wheels and runs the machinery 
of the mills; and I congratulate you on being united for 
a purpose so conducive to both the prosperity of a great 
manufacturing interest and the national welfare. 

I will now turn to the main subject, the financial and 
trade situation, present and prospective, in which I find 
much that is encouraging and favorable to a general better- 
ment of conditions from this time forward. 

With regard to business conditions and prospects, the 
general sentiment of both Wall Street and the rest of the 
country is optimistic, and to this may be attributed the ex- 
tensive recovery of the stock market that has already taken 
place since the crisis that began in October. Although the 
dealings in stocks have been very largely .prof essional, the im- 
provement reflects the confidence in the situation of the rich 
Wall Street men who have led the movement, and confidence, 
like distrust, is contagious. 



1016 FINANCIAL AND TRADE SITUATION AND PROSPECTS. 

The absence of any considerable buying by the outside 
public has been conspicuous, but so also, since the end of 
1907, has been forced or voluntary liquidation. Hence, there 
being no pressure to sell actual stock, it was easy for the 
powerful bull party at work to advance prices against the 
short interest, which was very large; and the bears were 
driven to cover their contracts at a heavy sacrifice of their 
previous paper profits. But, like the poor, the bears are 
always with us, and their expressed views as to trade condi- 
tions and prospects are, of course, as pessimistic as those of 
the majority are the reverse. But the majority rule, and 
Wall Street never fails to discount the future. It is the 
great financial barometer of the United States. 

Leaving sentiment aside, there is ample scope for differ- 
ences of opinion as to the exact situation and the future, so 
conflicting are the reports that come to us. In some sections, 
and some industries, very different conditions are reported 
than those that prevail elsewhere, and bankers, merchants 
and manufacturers in the same towns disagree as to things 
as they are. 

This shows that we are in that uncertain transition period 
which always follows panic; and how long it will last, is 
the problem that business men all over the country are now 
trying to solve. Meanwhile the rise in stocks, which has 
been encouraged by the banking interest largely for the sake 
of its influence in promoting confidence among the people 
of all classes, may fairly be looked upon as the precursor 
of substantial improvement in general business. 

Yet, however much we may hope for quick recovery from 
the effects of the crisis, we should always look unfavorable 
facts squarely in the face, for self-deception is the worst 
kind of folly. We must consider the worst, as well as the 
best, features of the situation, in order to gauge it correctly ; 
and the reduction of ten per cent, in the wages of cotton 
mill operatives in New England, and the working of many 
cotton, woolen and other mills on part time only, and the 
shutting down of others, shows how much manufacturing in- 



FINANCIAL AND TRADE SITUATION AND PROSPECTS. 1017 

dustry there, as well as elsewhere, has been affected by the 
severe ordeal we have passed through. 

But, so far as the banking institutions were concerned, 
Boston enjoyed a larger degree of immunity from trouble 
during the crisis than any other city, a fact that bears 
testimony to their soundness and conservatism. Boston 
may, therefore, well pride herself on this memorable cir- 
cumstance, the result of good banking and good business 
methods. She had, fortunately, no speculative capitalists 
with chains of important banks under their control, as New 
York had. 

The crisis accomplished one good thing, and that was the 
sweeping away of this unsound banking, which had become 
a menace not only to New York, but to the whole country. 

The best banking authorities believe that actual business 
improvement is already making headway, although there is 
no uniformity in it, the recovery in some places, and some 
lines of business, being decided, while in others it is barely 
visible. Thus the Southwest, and its great distributing cen- 
ter, St. Louis, report a larger degree of betterment than any 
other section, while Chicago, like the Eastern and Middle 
States, reports comparatively little. 

In the present stage of recuperation, the wage problem is 
forcing itself more and more upon public attention, and 
especially upon that of mill owners and the railway com- 
panies. The urgent necessity the railways are under of re- 
ducing them, to offset reduced earnings, is met by the 
unwillingness, or refusal, of the men to have them reduced. 
They have been encouraged in this attitude by President 
Roosevelt's action, and now the labor leaders are urging 
Congress to legislate in support of their position. But Cap- 
ital has its rights as well as Labor. 

The railway companies, as an alternative to reducing 
wages, have proposed an increase in freight rates, but ship- 
pers are up in arms against this, particularly manufac- 
turers; and the authorities of the States, as well as the 
Interstate Commerce Commission, signified their opposition 



1018 FINANCIAL AND TRADE SITUATION AND PROSPECTS. 

to it. The railways, meanwhile, have kept pace, as far as 
practicable, with the contraction of traffic, by discharging 
large numbers of their men. In this way they have mate- 
rially reduced their expenses, while they report increased 
efficiency by the labor still employed, every man in these 
times being anxious to hold his place by doing good work. 

That is to say, jobs being now scarce, men want to keep 
their jobs instead of being " laid off," as the phrase is. This 
of itself is a wholesome effect of hard times. 

The labor problem is one of peculiar difficulty, and sub- 
stantial, permament improvement in trade and securities 
will not be seen until there has been a complete readjustment 
of commodities, prices and wages in accordance with the 
altered conditions. To insure steady work for labor, and 
a fair profit for employers, why would it not be wisdom 
for the labor union leaders to agree to a contract to last 
for the coming four months only, consenting to a reduction 
of 20 per cent, in wages ? 

Readjustment is a harmonizing process, and harmony pro- 
motes recovery and the full development of our powers and 
resources. This is what the business situation imperatively 
calls for now, and all business men should do their best to 
foster it, and so work together as a unit, for in unity there 
is strength. We have an example of it in our United States. 

The cotton goods industry in New England has, I know, 
been much more severely depressed by the crisis than was 
at first thought possible; but, fortunately, the losses sus- 
tained will be the more easily borne because of the large 
profits of previous years. Notwithstanding the cuts made 
in standard goods, the demand for them is still abnormally 
light, and hence stocks are accumulating in the face of the 
heavy decrease in production. 

No wonder, therefore, that those most intimately con- 
cerned are more or less at sea as to how long this depression 
will continue, and what the results will be. They see cer- 
tain grades of goods that were selling at 8f cents a yard 
just before the panic now being offered at 5 \ cents, and 



FINANCIAL AND TRADE SITUATION AND PROSPECTS. 1019 

this is an object lesson that tends to make even the most 
optimistic of them a trifle blue for the time being. But this 
is precisely the time when courage and confidence in the 
situation are most needed. I give you all credit, however, 
for being equal to the occasion. 

With eighty-five millions of our own people to clothe — 
to say nothing of the rest of mankind — manufactured cotton 
products will before long be in demand again at rising prices, 
for civilization demands clothes in hot weather as well as 
cold. 

Meanwhile, endurance is called for, and will doubtless not 
be found wanting, except where special circumstances im- 
pose limits to it, and we all know that patience is a virtue. 

Recovery to normal conditions will, of course, be gradual, 
and it is better that it should be so, to ensure permanence. 
In the meantime, it will be a relief to the dry goods trade 
when sales are no longer extensively made by cutting under 
quoted prices more or less sharply. 

The bold, and even aggressive, action of the American 
[Federation of Labor in going to Washington and making de- 
mands upon Congress, and criticizing not only the laws but 
the decisions of the Supreme Court of the United States, 
puts a new and serious face on the old contest between Labor 
and Capital. It arouses some apprehension as to the lengths 
to which Labor will go, and how far its political influence 
may enable it to accomplish its purposes. Politicians are 
ever ready to show subserviency to Labor, merely for the 
purpose of gaining votes for themselves. 

We all want to see justice done to Labor, but we also want 
to guard against injustice being done to Capital by Labor, 
and Labor's resistance to a reduction of wages to correspond 
in some degree with the decline in the earnings and profits 
of those employing it, is a practical injustice to all those 
outside the ranks of organized labor. 

The readjustment of wages to existing conditions is, there- 
fore, of the first importance and should be first to receive seri- 
ous consideration, with a view to harmonizing both sides, and 



1020 FINANCIAL AND TRADE SITUATION AND PROSPECTS. 

a prompt settlement. Half a loaf is better than no bread, for 
both Labor and Capital, and it is not to the interest of either 
to kill the goose that lays the golden egg. Their interests 
are mutual, but Labor is posing as if they were antagonistic. 
It has often done this before, but never more conspicuously 
than now. 

With respect to our foreign market for cotton goods, there 
is plenty of room to widen it, but our exports of these, in 
competition with England, Germany and other countries, 
are more or less checked by the high price of labor here, and 
its comparatively low price there. Hence we should con- 
stantly endeavor to overcome this disadvantage by keeping 
ahead of the rest of the world in labor-saving devices, and 
improvements in machinery and manufactures. We should 
try to surpass all Europe in the quality, as well as the cheap- 
ness of our goods. 

As we are the most inventive of all nations, and the 
quickest to adapt ourselves to new or altered conditions, we 
shall doubtless find this feasible, if not an easy task, whereas 
England, our greatest competitor in manufacturing, is pro- 
verbially slow in changing machinery. 

I once asked Mr. Andrew Carnegie what was the main- 
spring of his phenomenal success as a manufacturer of iron 
and steel, and he replied : 

" I always kept foremost in making improvements in my 
machinery and methods of manufacture. Whenever a new 
invention that I could use was patented, I secured it at any 
cost, and so kept in advance of all my competitors. 

" At one time I had two million dollars' worth of new 
machinery that I was about to install, but a man came to 
me with an improvement in it that he had just patented, 
and I bought his patent and adopted it. In doing this, I 
had to cast aside, as old material, the two millions' worth 
of new machinery. But the improvement recompensed me 
many times over for what I had sacrificed to make the 
change." 

It is in promoting improvements in manufacturing proc- 



FINANCIAL AND TRADE SITUATION AND PROSPECTS. 1021 

esses and machinery that this Association, apart from its 
general utility, can be of great and permanent value to the 
cotton mill industry and kindred manufacturing enterprises. 
Ready adaptability of means to ends is as important in 
manufacturing cotton sheetings, and the other products of 
the loom, as in every other business and everything else. 

I remember that in conversation with Admiral Sir 
Charles Beresford, of the British navy, when he was visit- 
ing Eew York, he told me of an instance of American 
adaptability to circumstances, that he noticed while in 
China. The Chinese had been long complaining of the want 
of sufficient width in a certain grade of British cotton 
fabrics that they were using and they had asked the English 
agents from time to time if they would increase the width. 
But nothing came of their expostulations and requests, as 
the agents, after writing home, told them the Manchester 
manufacturers said they would have to alter their machinery 
in order to give them the desired width, and this could not 
be done. 

But the agent of a large American dry goods house, with 
extensive cotton mill interests, arrived at Shanghai, and 
hearing the complaint of the Chinese, he said : " Give me 
your order and you can have whatever width you want," 
and he got the order. Sir Charles added : " So, you see, 
you people are smart and give them what they want ; besides, 
you make your cotton goods heavier than we do and the 
Chinese like them better because they wear longer, for when 
the Chinese put on such clothes they never come off until 
they rot off." Here was an instance of ready adaptability 
to the occasion and market needs by an American, which 
the English lacked. 

An illustration of the importance of scientific investiga- 
tion with a view to the discovery of new elements and proc- 
esses in manufacturing, is found in silkine, a fabric closely 
resembling silk, which has come into popular use. It re- 
sulted from the discovery that the mulberry and other trees 
on which silk worms feed possess properties that could be ex- 



1022 FINANCIAL AND TRADE SITUATION AND PROSPECTS. 

tracted and utilized, to a certain extent, in the production 
of a silky fibrous material which in combination with fine 
Egyptian cotton, made a cloth so closely resembling silk as 
to be possibly mistaken, except by experts, for the silk of 
the silk worm. Here theoretical and practical science were 
happily combined with mechanical skill to produce an 
entirely new material, and doubtless there are many simi- 
lar opportunities awaiting discovery. This Association by 
stimulating such investigation in mechanical science may 
achieve even greater results than it anticipates. 

The world's markets offer a most magnificent opportunity 
for the enterprise of American cotton manufacturers. We 
grow four-sixths of the world's crop of cotton but manufac- 
ture only one-sixth. That is to say, we export three-fourths 
of the cotton we grow, leaving England and Germany to 
turn the fibre into yarns and fabrics for other countries in 
all parts of the world. A much larger share of this foreign 
trade ought by right to come to the United States, for the 
foreign market offers a field vastly larger and quite as profit- 
able as the domestic field, if the extraordinary profits of 
Lancashire spinners during the past few years are to be 
taken as an index. 

Last year Great Britain exported cotton goods valued at 
$500,000,000, while our exports of cotton manufactures 
were valued at only $26,000,000. During this same period 
Great Britain exported 6,298,000,000 yards of piece goods 
valued at $400,000,000; our exports meanwhile being only 
216,000,000 yards at $15,000,000. Here, then, is a field 
for our best ambitions and skill. We cannot forever endure 
the sight of seeing other nations manipulating our raw prod- 
uct at enormous profits, a goodly portion of which should 
remain for distribution on this side of the Atlantic. 

There is one respect in which the New England cotton 
industry much impresses an outsider. Your industry, I am 
glad to say, is, and always has been, remarkably free from 
the evils of promotion and speculative enterprise. Further- 
more, it has most fortunately not been inoculated with the 



FINANCIAL AND TRADE SITUATION AND PROSPECTS. 1023 

fever for trusts and consolidations; although I happen to 
know that such projects have from time to time been pre- 
sented to your consideration. Perhaps your refusals to 
entertain such propositions thus far have been due to con- 
ditions peculiar to the industry; yet I venture to hope that 
it has been not a little due to the strong spirit of individual- 
ism which is one of the best characteristics of the New Eng- 
lander; a characteristic which I trust will be cherished for 
generations to come, because it is a most wholesome and 
necessary check upon the paternalistic tendencies of the day. 
One beneficial result of this policy is that the cotton indus- 
try is adapting itself to the new conditions following the 
panic with much less friction than in other industries. You 
have lowered prices, curtailed production and diminished 
costs in order to stimulate a revival of consumption in a 
manner that promises to make you among the first in com- 
pleting the process of readjustment. When recovery begins 
the cotton trade ought to be among the first to feel reviving 
influences. While other industries have been using or mis- 
using their newly acquired powers of combination to resist 
natural tendencies, or to squeeze out dividends upon grossly 
watered stocks, you have squarely faced the new conditions 
and trimmed your sails accordingly. I have no doubt, there- 
fore, that, with your mills honestly capitalized, you will soon 
be going along safely and comfortably in smoother waters 
when the trusts will still be struggling against adverse con- 
ditions simply made worse by foolish resistance to economic 
laws. 

The most encouraging feature of our business situation 
now is the prospect of an unusually large wheat crop, win- 
ter wheat being in extra fine condition, and spring wheat 
having been planted under the most favorable conditions, 
owing to the season for farm work being three weeks earlier 
this year than last. The planting of other crops has also 
been facilitated by good weather, and altogether the agri- 
cultural outlook, at this date, has very rarely been so prom- 
ising of bountiful results. 



1024 FINANCIAL AND TRADE SITUATION AND PROSPECTS. 

This is a great national blessing, for the foundation of 
our national wealth is our crops. Agriculture is indeed the 
great source of both our national and international strength. 
It was almost entirely from this source that we were en- 
abled, from a merely nominal sum last August, to build up 
a foreign trade balance of 521 millions of dollars in the first 
eight months of this fiscal year, and the large preponderance 
of our exports over our imports still continues, and will 
make the balance in our favor at the end of the year one of 
unexampled magnitude. 

This curtailment of our imports, especially of luxuries, 
has made the shoe pinch in Europe, for we had been 
Europe's best foreign customers. But, naturally extrava- 
gant as we are as a people, we can economize with as much 
ease, celerity and determination as we can spend, when the 
necessity to do so arises. So we are at present economizing 
on a grand scale and with great success. 

We have only to consider our unlimited sources of na- 
tional wealth, however, to see that the prospect before us 
is one that should inspire absolute confidence in the gradual 
return of prosperity in all directions. Let us bear in mind 
that our agricultural products yielded us last year, as the 
returns of the Department of Agriculture show, $7,400,- 
000,000. 

Mining and manufacturing were the next largest sources 
of our national wealth. The metals mined yielded $3,000,- 
000,000, and this metal product was converted by manu- 
facturing into materials that had a market value of fifteen 
thousand millions of dollars. Thus the agricultural prod- 
ucts, metals mined and metals manufactured, in the year, 
had a value of $25,400,000,000. We may, therefore, well 
and honestly say that this is a great country. " Long life 
to it ! " as an enthusiastic Irishman was once heard to ex- 
claim. " By jabers, it can't be beat! " 

The market for raw cotton has, of course, been handi- 
capped by the depression in the cotton industry, and the ef- 
forts of the Southern planters to advance the price of the 



FINANCIAL AND TRADE SITUATION AND PROSPECTS. 1025 

staple very materially by holding it back instead of market- 
ing it, have failed, as they deserved to fail. Cotton is now 
lower than it was during the crisis, and about as low as at 
any time in this crop year, being 300 points, or 3 cents a 
pound, below the season's top notch. But cotton is still 
king in the factories. 

This decline is equivalent to $15 per bale, or a hundred 
and eighty million dollars on a crop of twelve million bales. 
So spinners and spot buyers in general have not for two 
years had so good a chance to purchase for summer and 
autumn delivery, and advantageously cover their season's 
requirements as they had last month and this. But spin- 
ners have taken more than a million bales less of this sea- 
son's crop since the first of September last than in the same 
time in the previous year. 

The Census Bureau in its final report for the season tells 
us the total crop ginned up to the first of March last was 
11,261,163 bales, including " linters " ; and it estimates that 
127,646 bales remained unginned on March 1. Allowing 
for the usual under-estimating of the cotton ginned in the 
reports to the Government, it follows, from the figures, that 
the spinnable cotton from the last season's crop will aggre- 
gate no more than 11,500,000 bales. This is with the aver- 
age net weight of a bale, 501-| pounds. 

The statistical or technical position of cotton is therefore 
bullish, notwithstanding the very large falling off in con- 
sumption and the requirements of spinners, this year, both 
here and in Europe, as the indications are that there will 
not be a very heavy or unmanageable load of cotton to be 
carried over into the new crop year, which begins on the first 
of September. 

One very hopeful sign of the times is the check that has 
been given to radical state legislation concerning railway 
corporations by the Supreme Court of the United States, 
declaring the rate laws of Minnesota and North Carolina in 
certain respects unconstitutional. The decision practically 
denies the right of a State to enact and enforce rate laws 



1026 FINANCIAL AND TRADE SITUATION AND PROSPECTS. 

against interstate railways. This takes the wind out of the 
sails of a good many Western and .Southern political agita- 
tors, and makes the State courts more definitely than ever 
subservient to the Federal Courts. The clash as to jurisdic- 
tion between the two courts which we witnessed in the South 
last year is therefore not likely to recur. 

The decision was based mainly upon the unreasonable 
penalties prescribed by the North Carolina and Minnesota 
statutes, but it sustains beyond all question the contention 
of the railway companies, which are now held to be at lib- 
erty to refuse to obey any State law reducing rates upon 
their making affidavit that it would reduce their earnings 
to an unreasonable extent. Upon such an affidavit a judge 
of the United States Circuit Court can order a suspension 
of the operation of the law until the law can be shown in 
court to be reasonable. 

This is a protecting bulwark against radical and confis- 
catory State legislation, resulting from the inflammatory 
appeals of demagogues. By protecting the railways it pro- 
tects investors, and adds to the security of railway property, 
which, in turn, strengthens confidence in that property, and 
confidence is what is most necessary to recuperation. Let 
us therefore help to increase it. 

It is the desire to promote confidence, and clarify the busi- 
ness situation, that has inspired the recent utterances of 
President Roosevelt, and dictated the course of the Federal 
law department. This is commendable and has had a good 
effect. 

The most spectacular event of the crisis, and its most sen- 
sational starting point, in New York, was the failure of the 
Knickerbocker Trust Company under a wild rush to with- 
draw its deposits on the 22nd of October, 1907, and the 
subsequent suicide of Charles T. Barney, its president; and 
the most satisfactory event in its later career was its re- 
sumption of business on the 26th of March, 1908, after 
many trials and tribulations. On that day, too, it received 
$1,500,000 of deposits more than it paid out, a remarkable 



FINANCIAL AND TRADE SITUATION AND PROSPECTS. 1027 

contrast to the heavy run before the suspension. This, and 
the almost simultaneous payment in full of the depositors 
of the Oriental Bank, a New York State institution, were 
reassuring influences that did much in helping to pave the 
way to general recovery, and stimulate the rise in the stock 
market, which of itself had a good moral, if not material, 
effect upon the business situation. 

It was not till the fourth day after the Knickerbocker's 
suspension, namely, on Saturday, the 26th of October, that 
the New York Clearing House committee decided to issue 
Clearing House certificates to the banks in the Association 
needing them to pay their Clearing House balances. Then 
their issue against satisfactory collaterals deposited with the 
Clearing House, began at once. This was the signal for 
every other clearing house in the country to do likewise 
simultaneously. 

On the same day the detailed weekly bank statements were 
suspended, and these were not resumed till the 8th of Feb- 
ruary, 1908. Meanwhile a hundred and one millions of 
the Clearing House certificates had been issued and re- 
deemed, except some that were held by the National Bank 
of North America, the Mechanics and Traders Bank, the 
Bank of New Amsterdam, and the Oriental Bank, which 
had all failed. But these were all redeemed before the end 
of March. 

It was in the third week of November that the issue of 
Clearing House certificates reached its maximum. But the 
banks had reached their largest deficit in reserve in the first 
week of November, when it rose to $54,100,000, a prodi- 
gious amount of which the public was in ignorance. 

In Boston at the same time your banks had taken out 
$11,995,000 of their own Clearing House certificates, but this 
total was never increased. After that the banking situation 
all over the country was slowly on the mend. But, owing 
to the partial suspension of currency payments by the banks, 
caused by runs and hoarding inspired by the use of clearing 
house certificates, currency and gold commanded a premium 



1028 FINANCIAL AND TRADE SITUATION AND PROSPECTS. 

in New York ranging from 1 to 5 per cent. This premium 
was current from the time the certificates were first issued 
till the end of December, 1907. The hoarding of money 
was, meanwhile, enormous. After that the premium became 
suddenly a thing of the past, and hoarded money was rapidly 
deposited with the banks. 

It is noteworthy that in the panic of 1873 the New York 
Clearing House issued only $26,565,000 of certificates, and 
in the panic of 1893 only $41,690,000. But these figures 
merely show how very much smaller New York's banking 
capital, deposits, and loans were in those years than they 
are now. 

The throwing out of employment through the effects of 
the panic of large numbers of men, most of them of foreign 
birth, resulted in a larger exodus of steerage passengers to 
Europe than was ever before known, these aggregating 114,- 
078 in the first two months of 1908, while only 50,601 im- 
migrants arrived here during those months. The outward 
rush commenced in November and it still continues with 
little abatement. But as a safety valve for unemployed labor 
it is perhaps to be welcomed for the time being, as it reduces 
the ranks of the unemployed, and when the labor of these 
aliens is again in demand they will return as fast as they 
went. They know on which side their bread is buttered. 

Immigration is, however, no longer as necessary to this 
country as it was in pioneer times. Our aim now should 
be to keep out undesirable immigrants, particularly anar- 
chists, Black Hand Italians and Armenians, and rabid so- 
cialists who come here to make trouble, and preach doctrines 
of equality and confiscation, entirely inimical to American 
institutions and national as well as individual progress. 

I now come to the markets for stocks, bonds, and specu- 
lative commodities, and the recent indiscriminate attacks 
upon them by Mr. Bryan and others both in and out of 
Congress, as hotbeds of what they call gambling. 

As one of the oldest members of the New York Stock Ex- 
change I can, from my long experience, testify to the integ- 



FINANCIAL AND TRADE SITUATION AND PROSPECTS. 1029 

rity and high character of its membership, and the strict 
discipline of that Association over those composing it. Any 
breach of its rules, any deviation from the line of fair deal- 
ing, or anything prejudicial to its interests, is promptly 
investigated and as promptly punished, when proved to the 
satisfaction of the Governing Committee, by fine, suspension, 
or expulsion. But it is very rare for a member to be either 
charged with or found guilty of chicanery of any kind. 

It is therefore unjust and outrageous for Mr. Bryan and 
others who have denounced the New York Stock Exchange 
to call it a gambling arena and its members gamblers. They 
are brokers in a free market, a market open to all the world, 
and they are ready to receive and execute orders from all 
the world, and whether or not these orders are for invest- 
ment or speculative account, it is not for them to inquire. 
Still less is it for them to discriminate against speculation, 
when speculative far more than investment dealings are the 
life of every stock exchange in the world. A stock exchange 
to have any value must be a free market. 

Speculation in stocks is no more gambling than specula- 
tion in real estate, or merchandise, although different in 
degree, but there may be excesses in speculation as in every- 
thing else. The stock exchange as a body should not, how- 
ever, be held responsible for the excesses of individual 
speculators, or for the dishonesty of men who embezzle in 
order to get money for the purpose of speculating. Gas 
should not be blamed for causing the death of a man who 
deliberately locks his room door, shuts his windows tight, 
and turns on the gas to die. 

Those who know Wall Street well, as I do, know how 
false a view of it Mr. Bryan and others, including certain 
members of Congress, have given to the public. If they 
really had known Wall Street well, and had any conscience, 
they would not have said what they did say. They have 
misrepresented it grossly and unjustifiably, and in their 
moralizings upon it they have not reasoned, but ranted. 

Some of them have even advocated the entire elimination 



1030 FINANCIAL AND TRADE SITUATION AND PROSPECTS. 

of the Stock Exchange. They would thus invite financial 
chaos and leave investors, the banks, insurance companies, 
and all other corporate holders of stocks and bonds practi- 
cally without a market for their securities in which to either 
buy or sell. This would be putting back the hands of the 
clock of progress with a vengeance. It would be going back 
to the wigwam and the canal boat, but of course it would 
never be tolerated and therefore be impossible. 

Yet this slandering and mudslinging campaign by repre- 
sentatives of both the great political parties for political 
effect is none the less injurious and reprehensible because 
it can never have any substantial result, much less the de- 
struction of Wall Street. It is scandalous abuse of which 
we may have more before the November election, but it is 
already high time that it should stop in the interest of truth 
and justice and the public welfare. 

These assailants of the New York Stock Exchange would 
also abolish all other stock exchanges, and the Chicago Board 
of Trade, as well as all the other grain and provision ex- 
changes, and all the cotton exchanges in the country that 
deal in futures. Perhaps they are not aware that the farm- 
ers and planters of the West and South derive, or can derive, 
great benefit from having a free market for " futures " open 
to them, for it enables them to sell their crops before they 
are harvested, if the prices are satisfactory and they want 
to make sure of them. This applies also to the Coffee Ex- 
change and importers of coffee. 

To drive dealings in time options from the Produce and 
other exchanges would be to drive them to Canada, Liver- 
pool, and London, and let the markets there make prices for 
us, instead of making them for ourselves, all of which shows 
the absurdity of this clamor against speculation in stocks 
and speculative commodities. Speculation is thus stigmatized 
as gambling with no more reason or justice than the inevi- 
table risks of ordinary mercantile trade could be called 
gambling, for no one can engage in trade of any kind with- 
out taking risks. 



FINANCIAL AND TRADE SITUATION AND PROSPECTS. 1031 

Now that the storm of the crisis has passed away, and the 
investigation and prosecutions that have taken place have 
laid bare the corporate evils that were rife among us, includ- 
ing railway rate rebating and various forms of looting and 
wholesale graft by controlling capitalists, we have come into 
a purer business atmosphere. Corrupt, plundering, and law- 
breaking officers of banks, and railway, insurance, and other 
large corporations have, in many cases, been exposed and 
shown the error of their ways, and we have in consequence 
a higher business morality than we had before we passed 
through this ordeal of purification. In other words, the 
house cleaning we have had has done us good, and this of 
itself is a compensation that can hardly be overrated in its 
future influence. Banks and trust companies and railways, 
insurance, and other corporations have been freed from much 
unsound and dishonest management, and also loose, grafting 
and speculative practices, and we have in their place that 
higher moral tone which is safeguarded by greater publicity 
of accounts and more rigid official examinations under new 
and stricter laws than ever before. 

Thus temptation to chicanery and other corporate wrong- 
doing, and abuses, by those in control of corporations, is 
largely reduced, and this is important, for an old proverb 
tells us that opportunity makes the thief. 

Good grounds for an optimistic view of the situation and 
the future, you will all acknowledge, can be found in our 
unequaled and immense natural resources and their unin- 
terrupted development. These and the enterprise of our 
people and our free institutions and popular government, 
which makes us all sovereigns in our own right, are national 
blessings. They fortify our national life, and leave our 
splendid growth and powers of achievement unchecked; and 
our wonderful progress in the past will no doubt be eclipsed 
by our still greater and grander future, with the United 
States of America the foremost nation in the world. 

In all this progressive movement the cotton and other mill 
industries of New England, and the rest of the country, will 



1032 FINANCIAL AND TRADE SITUATION AND PROSPECTS. 

share; and in this natural and legitimate expansion, gentle- 
men, yon and your successors may look forward to, and find, 
the potentiality of wealth beyond the dreams of avarice, as 
Andrew Carnegie did in Pittsburg. From such a great 
American object lesson for manufacturers as Carnegie, you 
should all derive a vast amount of encouragement, and that 
hope that springs eternal in the human breast. 



CHAPTEE LXXXVII. 
PEACE ASSURANCES FROM JAPAN. 



ASSURANCE FROM VISCOUNT KENTARO KANEKO, THE EMI- 
NENT STATESMAN OF JAPAN, THAT BELLIGERENT 
REPORTS ARE GROUNDLESS. 



FABRICATIONS, HE SAYS, OF SENSATIONAL NEWSPAPERS. 



NO APPREHENSION IN EMPIRE OF ANY DISRUPTION OF FRIENDSHIP 
EXISTING BETWEEN THE TWO NATIONS. 



DECLARING that all talk of trouble between this country 
and Japan is the outgrowth of " pernicious fabrication 
on the part of sensational newspapers/' Viscount Kentaro 
Kaneko, who was special Ambassador to the United States 
from Japan during the Russian-Japanese war, has written a 
reply to a letter addressed him by me, in which the latter, 
under date of December 5th, last, expressed the hope that 
no difficulties might arise between the two countries which 
could not be readily and amicably adjusted. 

Viscount Kaneko, whose elevation to his present title and 
whose appointment as adviser to the Emperor on all things 
American, came close upon the heels of the close of the struggle 
with Russia, besides is one of the present eminent Statesmen of 
the Empire. During General Grant's first term, he was a 
member of a commission sent here to study American finance. 
Prince Ito was the head of this commission and I acted 
as friendly adviser, at the request of General Grant, then 
President. This commission afterwards went to London, 
Paris, and Berlin, and made a similar investigation of the 
financial systems of each of those nations, and on their re- 



1034 PEACE ASSURANCES FROM JAPAN. 

s turn home, via the Suez Canal, they made a full report of 
their mission and in it strongly recommended their govern- 
ment to adopt the American system, which was promptly 
done, and I was appointed by the Japanese Government 
special agent to aid in carrying out their new financial 
system. I awarded the contract for the engraving to the 
Continental Bank Note Co., of 'New York, on their success- 
ful competitive bid, and after all the work of establishing 
their new financial system was accomplished I received a 
flattering commendation from the Secretary of the Japanese 
Treasury for my services in the matter and a very handsome 
pair of Japanese silver vases as a souvenir accompanied same. 
My letter, which was sent when reports of impending 
trouble with Japan were numerous, is as follows: 

My Dear Viscount: December 5, 1907. 

It gives me infinite pleasure to congratulate you on the bestowal of your 
present very great title by the Emperor, knowing as I do that it is so richly 
deserved. No one in this country can bear stronger testimony of your 
untiring vigilance and masterly efforts in the work you had on hand in this 
country during your war with Russia, and the marvelous success which 
crowned your exertions. No one of your nation who has visited this coun- 
try made more or stronger friends than you did amongst our people, and 
we are all hoping that the time will come when you will return as Am- 
bassador. It would indeed be an appointment for the benefit of both 
nations, and would do more than anything I can think of to strengthen the 
long-existing friendly relations between the two peoples. There are occa- 
sional rumors of our relations being strained, but they originate, I am quite 
sure, in either Russia or Germany, owing to a desire in some quarters to 
disrupt the friendship. You can rely upon one fact, however, that if there 
is ever a severance, which God forbid, it will not emanate from this side. 

Faithfully yours, HENRY CLEWS. 

VISCOUNT KANEKO'S ANSWER. 
My Dear Mr. Clews: 

Your kind letter of December 5th reached me a few days ago and I am 
infinitely obliged to you for your hearty congratulation on my recent ad- 
vancement to a higher rank for a modest service which I was able to render 
my Emperor and country during the late war. In performing the duties 
which were entrusted to me during my sojourn in your country, what little 



PEACE ASSURANCES FROM JAPAN. 1035 

I was able to accomplish was due to the kind encouragement and assistance 
which the friends in America so unsparingly gave me, and in this connection 
I assure you that you share the largest part of it. 

You mentioned about the so-called strained relations between America 
and Japan. It is really a pernicious fabrication of sensational newspapers, 
and I am glad that you seem to believe it to be so too. So far as I am aware 
there is nothing of a serious nature diplomatically pending between the two 
countries. It is absolutely groundless, therefore, even to imagine, as some 
alarmists would have us believe, that there may be a possible disruption of 
the friendship which has been cemented so firmly ever since this country was 
introduced by America to the family of civilized nations in the world. I 
assure you that every one of our people on this side of the Pacific is keenly 
alive to the gratitude we owe you, and I think it most remarkable that no- 
body in this empire seems to entertain, even to the slightest degree, any ap- 
prehension of a breach of the friendship. Such a thing never comes into 
our head. Again thanking you for your courtesy, 
9 Sincerely yours, 

(Signed) KENTARO KANEKO. 

Tokyo, Japan, January 21, 1908. 

I have kept up a correspondence with Prince Ito and 
other Japanese Statesmen ever since I was first associated 
with them thirty-seven years ago. The letter from the 
Viscount spoke for itself and showed the utter nonsense of 
sensational reports. 

I also wrote to Marquis Ito about the war rumors as 
follows : 
My Dear Marquis: December 5, 1907. 

Notwithstanding the frequent rumors that have of late sprung up, both 
in this country and Europe, to the effect that the long-existing friendly 
relations between Japan and America are becoming strained, I think I 
am in a position to know that there is not the slightest foundation therefor, 
so far as we are concerned. There has been, however, a vicious motive in 
their circulation, and it is quite clear to my mind that they have had their 
origin in, and are disseminated by people in Russia and Germany, the wish 
being father to the thought. For some reason or other they seem par- 
ticularly anxious that the pleasant relations existing between our two 
countries should be weakened, and finally severed, hence the strenuous 
efforts in that direction. I feel quite sure, however, that there is not the 
slightest possibility of such a contingency. 

To show how false these rumors are, as well as to cement the friendship 
which now exists between our countries (which you and I know to be real 



1036 PEACE ASSURANCES FROM JAPAN. 

and lasting) and to put an end to the jingo talk of the press both here and in 
Japan, would it not be an excellent idea for the Emperor to formally invite 
the Admiral and Commanders of our fleet, which is to cruise in the Pacific 
waters, to meet him at some convenient seaport in your country? I know 
that the American people would appreciate such an honor and that the 
greeting they would receive from your countrymen would banish all 
thought of a disruption of our pleasant relations. The Yankees of the 
West respect and admire the Yankees of the East, and every effort should 
be made to increase the harmony which now prevails. 

Hoping, my dear Prince, that you are enjoying good health and happi" 
ness, I remain Faithfully yours, 

HENRY CLEWS. 

Marquis Ito, Tokyo, Japan. 



FLEET TO VISIT JAPAN. 

INVITATION ACCEPTED. 

NEW PROOF OF FRIENDSHIP BETWEEN THE TWO NATIONS. 

Official Statement from Washington, March 20. 

The American battleship fleet is to visit Japan. The 
desire of the Emperor to play host to the " Big Sixteen " 
was expressed to Secretary Koot yesterday by Baron Taka- 
hira, the Japanese Ambassador. The invitation, which was 
in the most cordial terms, was considered by President 
Eoosevelt and the Cabinet to-day. Secretary Root was 
directed to accept the invitation, and the acceptance was 
communicated to Baron Takahira this afternoon. 



CHAPTEK LXXXVIII. 
THE EMPEROR OF JAPAN. 



DECORATES HENRY CLEWS WITH THE ORDER OF COM- 
MANDEUR OF THE MOST DISTINGUISHED ORDER OF 

THE RISING STJN ON THE INSIGNIA IN JAPANESE 

LETTERS IS " KUN-KO-SEI-SHO " WHICH 



LETTER FROM VISCOUNT KANEKO. 

New York Tribune, March 21, 1908. 
My Dear Mr. Clews: Tokyo ' March 23 ' 1908 ' 

Please accept my heartiest congratulation on the new honor which has 
been added to your already distinguished life by His Imperial Majesty, 
the Emperor, who was pleased to confer upon you the Imperial Decoration, 
in recognition of your valuable service to this country. In due time, I 
know, Ambassador Takahira in Washington will officially present it to 
you. I hardly need say how gratefully I am appreciating your kind 
friendship which enabled me to perform whatever was entrusted to me, 
though to a very modest extent, during my sojourn in your land in 1904- 
1905. And in this connection, I assure you that I now look back, with 
much feeling, to those pleasant times I had with you in America. I 
sincerely hope that our next meeting will soon be in this country where 
your special interest in us is already so greatly appreciated, as is shown 
in the recognition which has been given you by the Emperor this time. 

With my renewed assurance of the warmest regards to yourself, and 
hoping that this will find you well, I remain, 
Very sincerely yours, 

(Signed) KENTARO KANEKO. 

Mr. Henry Clews, 

New York City. 



1038 THE EMPEROR OF JAPAN. 



COPY OF LETTER TO VISCOUNT KENTARO KANEKO. 

My Dear Viscount: April 25, 1908. 

I am in receipt of your most highly appreciated letter of March 23d, 
for which I cordially thank you; and I am daily expecting to be honored 
by receiving the Imperial Decoration which you state is to be conveyed 
by Ambassador Takahira. Upon its receipt I will formally express my 
gratification to his Imperial Majesty, the Emperor, for the great honor 
conferred. 

If Japan were nearer to New York I might be able to promise that our 
next meeting would be in your own country — the Land of the Rising Sun — 
but as you have achieved so much good for Japan, in the United States, I 
doubt not that business, or international diplomacy, of which you are one 
of the masters, will bring you here again, when, I assure you, you will be 
received with the honor and respect which your distinguished services 
and your high personal character entitle you to expect. 

With assurances of the highest regard and friendship for you and your 
countrymen, I have the honor to remain, 

Very sincerely yours, 

HENRY CLEWS. 
Viscount Kentaro Kaneko, 

Tokyo, Japan. 

CONSULATE GENERAL OF JAPAN. 

60 Wall Street, New York City, 
Esteemed Sir: April 27, 1908. 

Referring to the official dispatch of even date, I take liberty to ask you 
to appoint some afternoon in the near future which will be convenient for 
you to recieve me at your home or elsewhere when I will have the honor 
and pleasure of carrying out the important mission of presenting you with 
the distinguished mark of honor. With kind regards, 

Yours very respectfully, » 

(Signed) K. MIDZUNO. 
Mr. Henry Clews, 

630 Fifth Avenue, New York City. 

I named Sunday, May 3d, at half-past one o'clock, at my 
residence, 630 Fifth Avenue, and invited a large number 
of friends to luncheon, which made the occasion a most 
enthusiastic and enjoyable one. 



THE EMPEROR OF JAPAN. 1039 

The Honorable Kokichi Midzuno, said: Mr. Clews, acting under the 
instructions of His Excellency Count Tadasu Hayashi, Minister of 
Foreign Affairs, I have the honor to inform you that His Imperial Majesty, 
the Tenno of Japan, my August Sovereign, as a special token of Imperial 
good will, has graciously been pleased to confer upon you the decoration 
of Commandeur of the most distinguished order of the Rising Sun, and 
I have the honor to present to you the said decoration. In performing 
this most pleasant duty, I deem it my privilege to avail myself of this 
occasion to tender my hearty congratulations and to convey to you, Es- 
teemed Sir, the assurance of my highest consideration. 



Which was replied to by me as follows: 

Mr. Midzuno: 

In receiving at your hands under the instructions of His Excellency 
Count Tadasu Hayashi, Minister of Foreign Affairs for the Empire of 
Japan, the decoration of Commandeur of the most distinguished order of 
the Rising Sun, bestowed upon me by His Imperial Majesty, the Emperor 
of Japan, as a special token of his good will, I respectfully acknowledge 
my high appreciation of the honor, and shall always value the distinction 
as one of the greatest that could be conferred upon me. I shall ever 
regard it not alone as a flattering compliment to myself, and a recognition 
of such services as I have been able to render, but as an emblem of the 
friendly relations that bind Japan and the United States together in a 
bond of sympathy; and I trust that this tie of friendship will never be 
weakened. I at least will always endeavor to strengthen it. 

I have long been intimately conversant with the affairs of Japan, and 
been deeply and sympathetically interested in the rapid and wonderful 
development of the Empire, and all the more so in consequence of my 
good fortune in having had the personal acquaintance, while they were in 
New York, of those two distinguished Japanese Statesmen, who are now 
Prince Ito and Viscount Kentaro Kaneko. Moreover, the correspondence 
that has passed between us since their return to Japan has only quickened 
my regard, and heightened my admiration for them and their Country. 
Both have proved themselves great in peace as well as war, and may the 
light of the Land of the Rising Sun never grow dim, and America and 
Japan be joined by their mutual interests in unbroken peace and concord 
forever. 

With many thanks to His Imperial Majesty, the Emperor, for this great 
honor, and to His Excellency Count Tadasu Hayashi, as well as yourself, 
for your courtesy in the fulfilment of your duties, and for the evidences of 
your personal friendship for me, which touches me deeply, I assure you 
that my appreciation cannot be expressed in words. 

This symbol of the Rising Sun indicates the coming of the day of great- 



1040 THE EMPEROR OF JAPAN. 

ness of your nation, and my fervent hope is that darkness may be unknown 
in your land. 

In the midst of our festivities to-day there is a cloud, and I desire to 
express my deepest sympathy to the people of Japan in the loss of so many 
young lives in the disaster which visited them during the past week. 
Though dead, these young men still live as an example to others that a 
life given to country in time of peace deserves the same lasting glory as 
though given in battle. 

I then requested the ladies and gentlemen to fill their 
glasses and rise and drink to the health of His Imperial 
Majesty, the Emperor of Japan. 

The Consul General of Japan answered the toast as 
follows : 

Mr. Clews, Ladies and Gentlemen: 

As the local representative of Japan, I have the pleasure and honor to 
thank you for the toast to His Imperial Majesty, proposed by our esteemed 
Host and so heartily joined in by you all. It is high honor as well as great 
pleasure that I was in a position to personally present that high mark of 
honor to Mr. Henry Clews. But what makes me most happy is that this 
came in most opportune time, when the international horizon which was 
said to be more or less clouded for some time has become clear — so clear 
that even the yellowest journals of this country which are sparing no ef- 
forts to stir up anti-Japanese feeling among American people, can no more 
find any meteorological item for a pessimistic weather forecast. Now that 
all transient and incidental questions between your country and ours have 
been settled in an amicable way, now that your government, on behalf of 
your people, have gladly accepted our invitation to participate in the 
Grand Exposition to be held in Japan in 1912, and now that my fellow 
countrymen in Japan have most pleasant anticipation to welcome the 
officers and men of your mighty fleet of battleships in our beautiful ports, 
I hope and trust that the most friendly relations between two nations, 
which have existed and are happily existing, will be an everlasting one. 

In conferring upon you, Mr. Clews, that high mark of honor which I have 
just had the pleasure to present, His Majesty is reflecting the friendly 
feeling and unfeigned affection that fifty millions of His faithful subjects 
entertain toward the people of this great Republic for their kind guidance 
and unshaken sympathy shown to Japan and her people from the time 
when your great Commodore knocked at the door of our Island Empire to 
invite its secluded people to the comity of nations down to the present day, 
not to speak of the most trying time Japan passed through a few years 
ago, and their gratitude for the most valuable service rendered by Ameri- 



THE EMPEROR OF JAPAN. 1041 

can people to effect the termination of hostilities and restoration of peace 
through the far-sighted, active, and able good offices of your great Presi- 
dent, whose toast I beg to propose. 



My acknowledgment by letter of the honor conferred 
upon me: 

Dear Sir: May 2, 1908. 

Please convey to his Imperial Majesty, the Emperor of Japan, my sin- 
cere thanks for bestowing upon me, as a token of his good will, the Im- 
perial decoration of Commandeur of the most distinguished order of the 
Rising Sun. No words of mine can fitly express my high appreciation of 
this honor, and I shall always value the distinction as one of the greatest 
that it has been my good fortune to achieve. I consider it a symbol of the 
friendly relations existing between Japan and the United States — a friend- 
ship which, I assure you, I shall endeavor to foster and promote to the best 
of my ability. 

With many thanks to his Imperial Majesty for the honor conferred upon 
me, of which I am justly proud, and to your Excellency for your kind 
offices in my behalf, I have the honor to remain, 

Most sincerely yours, 

(Signed) HENRY CLEWS. 

His Excellency Count Tadasu Hayashi, Minister op Foreign 
Affairs of the Empire of Japan. 

The following letter from Prince, then Marquis, Ito is 
interesting as a part of the world's history, and shows the 
feeling and friendship of that great statesman: 

Dear Sir: Tokyo, April 14, 1904. 

In answer to your letter of February 17th, let me first of all thank you 
most sincerely for the constant sympathy you have shown to our coun- 
try's cause. Your friendly efforts on the occasion of the Chino-Japanese 
war are still fresh in my memory and in the memory of all those who have 
heard of them. And, in general, the sympathetic attitude of public opinion 
of your country is a great encouragement to us in our faith that in fighting 
for our own future security and undisturbed enjoyment of the fruits of 
civilization, we are to a certain extent fighting also for the common cause 
of all. Just as you say, the supremacy of Russia in Corea would mean not 
only a constant menace to the very existence of our island empire, but 
would also mean the wholesale destruction of our commercial and indus- 



1042 THE EMPEROR OF JAPAN. 

trial interests already legitimately vested there in the past, not to mention 
the loss of natural outlet for our expanding people. The constant policy 
of Russia in this part of the globe has steadily inclined toward monopoli- 
zation of natural resources of the country she conquers and annexes. Her 
Manchurian policy is the irrefutable evidence of the above statement. So 
that in fighting for our own interests we are at the same time fighting for 
the principle of "fair competition all around" in these new markets of the 
world. I am indeed very sorry that the negotiations carried on on our 
side, with sincere "bona-fide," were not crowned with success so earnestly 
desired. If the Russian Government were a little more inspired by the 
spirit of moderation and of toleration for the legitimate interests of others 
things would not have come to this pass. As it was, there remained no 
other way for us but to try to enforce by arms what we could not do by 
reason. And we had to do so ere it would have become too late, for Russia 
was steadily and rapidly augmenting her fighting forces available in this 
part of her empire, so that before long the sheer mass of her fighting power 
would have made it a folly for us to attempt to resist the unscrupulous 
march onward. It has been nothing but a coolly thought-out step in the 
cause of State necessity. And I am much gratified to see that you as well 
as the general public opinion of your country, have understood our mo- 
tives in their true light. 

Hoping that you are enjoying as robust a health as when I saw you last 
in New York, and also hoping to be able to see you again in no distant 
future, 

I remain, yours sincerely, 

(Signed) MARQUIS H. ITO. 
Henry Clews, Esq., 

New York City, U. S. A. 

The following article, which I wrote at the time for one 

of our leading magazines, contains matter which may be 

instructive to my readers: 

May 24, 1904. 

The success of the Japanese in the present war with Russia is due to 
their great zeal. What they undertake to do, they generally do with great 
earnestness of purpose, which calls forth sacrifice, energy, courage, and 
determination. The concentration of all these qualities is the basis of 
success in all undertakings whether large or small. The success of the 
Japanese is easily accounted for also by the fact that they love their Em- 
peror as a people — they are willing to fight for him and to die for him, 
added to which, they are fatalists and are not afraid to face death on the 
battle-field, because they firmly believe that the next world is better than 
this, and therefore to die in a good cause, especially in fighting for the 
salvation of their country, secures a high and honorable position there. 



THE EMPEROR OF JAPAN. 1043 

Against these characteristics, which back the Japanese in the present war, 
their antagonists, the Russians, fear their Emperor, and under the auto- 
cratic rule of the nation soldiers are very often put into the army through 
force and kept there. There is a vast difference, therefore, on the battle- 
field, in the fighting qualities of soldiers who are backed by love of their 
Emperor and soldiers who are backed by fear of their Emperor. Then 
again, the discipline of the Japanese soldiers is of a more intelligent and 
up-to-date order than that of the Russians. Each regiment in Japan is 
composed of 400 men with a captain in command who carries a sword. 
Their training provides that if anything should happen to the captain, 
and his sword should fall to the ground, it must be taken up on the instant 
by the next in rank, and if anything should happen to him, the next 
in rotation takes his place, and so on all the way through to the last man; 
and each man to the end of the 400 is capable of picking up the sword and 
commanding with it, which also means to continue the fight until the last 
man in each regiment is killed or disabled; in other words, the fight is never 
to be given up except by total extinction. As an evidence of the interest 
and earnestness of the Japanese people, it is customary, amongst the trades- 
people, whenever a family that they have been supplying with the neces- 
saries of life is deprived of the father of the family, in consequence of his 
going to the war, to continue to supply all their needs the same as before 
and without sending any bill therefor. It is pretty difficult, therefore, 
for the Russians, notwithstanding that they so largely outnumber the 
Japanese, to whip such a determined, forceful people either on land or sea. 

There is scarcely an important college anywhere in the world in which 
Japanese students are not to be found studying for all vocations, and they 
are bent upon acquiring the best and most up-to-date methods in all walks 
of life. Admiral Togo was educated at Annapolis, and the American, 
English, and Continental colleges have educated many of Japan's best 
army and navy officers now engaged in the war. 

The Japanese are not given much to invention, but they possess great 
discernment and discrimination; they know a good thing when they see it, 
and are very skilful in imitation. Fifty years ago, when Commodore 
Perry successfully negotiated for the opening of the Japanese ports, that 
nation's intercourse with the outside world commenced. A few years 
thereafter a commission was appointed to frame a constitution. This 
commission visited all the great nations in pursuit of information. They 
familiarized themselves with the American constitution and the basis of 
the government of other nations; they culled the best from all and put it 
into their constitution- It took them seven years to accomplish it. When 
they made their report to the Emperor he accepted it without any modi- 
fications whatsoever, and notwithstanding the great changes that have 
taken place in that country in consequence of its growth and development, 
there has been no occasion up to this date to in any way change that 
document. 



1044 THE EMPEROR OF JAPAN. 

They also appointed thirty-five years ago a commission, with the present 
great statesman, Marquis of Ito, at its head, to visit the various nations 
with a view of obtaining the best information possible in order to establish 
a financial system. On their trip around the world to study the various 
foreign financial systems with a view of adopting one up to date for Japan, 
they first came to this country and brought official letters to General Grant, 
then President. General Grant turned them over to me to teach them 
our financial system. I posted them up thoroughly on our financial 
methods. They then went to England, France, and Germany, and re- 
turned to Japan via the Suez Canal. On their return, their report strongly 
favored the adoption of the American system. It was accepted by the 
Government, and their Secretary of the Treasury appointed me their agent 
to get up the engraving of their new currency and bonds, similar to those 
of the United States Government. I sent the phraseology and denom- 
inations of all our different demand notes and various bonds to them, and 
they transferred the same into their own hieroglyphics and sent them to me. 
I had the same beautifully steel engraved through the Continental Bank 
Note Company, who were the lowest bidders, in competition for the work. 
Since that time I have kept up a most interesting and exceedingly friendly 
acquaintance and correspondence with Marquis Ito, and his reeent letter 
to me contained much of interest, as it gave most excellent reasons for 
Japan being involved in the present war, which he said was not from his 
country's desire, but through necessity, as a matter of defense. 



CHAPTEE LXXXIX. 

.THE NATIONAL CORPORATION PROBLEM.* 

Mr. President and Members of the Economic Club: 

THE political and popular clamor against the industrial 
Trusts, with which we have been long familiar, was 
due primarily to the anti-monopoly sentiment of the people, 
but in a far greater degree to the crushing of competitors, 
through unlawful and unjust methods, by some of the con- 
spicuously large corporations, as Government prosecutions 
have shown. 

Hence public hostility to the Trusts increased, and reme- 
dial legislation was called for. The general feeling was that 
as a Trust had neither a body to be kicked nor a soul to 
be damned it should be handled by the law without gloves, 
and with the utmost rigor. 

The exposure of the railway rebating evil by which com- 
petition had been destroyed, and great monopolies built up 
resulting in colossal fortunes for their principal owners, 
added fuel to the fire of this indignation ; and similar abuses 
and unlawful practices by certain Trusts showed how strong 
combinations of capital had preyed upon, and killed off, 
weaker ones, and individual traders, to an extent that made 
the injustice of it a national scandal. 

Owing, to the inflamed state of the public mind, some 
of the laws enacted to remedy the evils complained of may 
have been too drastic for the purpose. But excesses of this 
kind correct themselves. Such laws are either not enforced, 

* An address by Henry Clews, LL.D., delivered at the First Annual 
Banquet of the Economic Club of Manchester, New Hampshire, May 20, 
1908. 



1046 THE NATIONAL CORPORATION PROBLEM. 

or repealed after being enforced. As General Grant once 
said to me, — " The surest way to repeal a bad law is to en- 
force it." We have fortunately always a safety valve in 
public opinion, which never errs in the long run, and the 
public opinion of a nation is reflected in its laws. 

The immensity of corporate interests in the United States 
is suggested by the fact that, including prominent city banks 
and Trust companies, there are more than 20,000 corpora- 
tions reported in the manuals devoted to them. Of these 
1,512 are active, operating railway companies, 1,129 electric 
traction companies, 1,158 gas, electric light and electric 
power companies, 267 water companies, 259 telephone, tele- 
graph and cable companies, 1,510 active, operating and pro- 
ducing industrial and miscellaneous companies, 880 active 
or operating mining companies, and 13,500 banking, insur- 
ance and other financial companies. 

The railway companies cover 222,013 miles, and they 
had a capitalization and bonded debt, on the 1st of Janu- 
ary, 1908, of $13,908,456,846, at par. 

The industrial and miscellaneous companies had at the 
same date a capitalization of $9,849,833,000, and the stocks 
of all the corporations in the United States aggregated more 
than $33,600,000,000 at par, exclusive of banks, Trust com- 
panies and other financial institutions. 

In connection with the present enormous railway mileage 
of the country, it is interesting to note that as recently as 
1865 there were only 3,085 miles in operation; and in 1879 
— the year of specie resumption, after the long civil war 
suspension from 1861 — this total had only increased to 
86,556 miles. 

These figures remind us of the great rapidity with which 
new railway corporations were subsequently organized, and 
laid their tracks, while old ones extended their lines from 
Maine to California, and the St. Lawrence to the Gulf of 
Mexico. 

We can also remember the Nation's phenomenal progress 
simultaneously in all other directions, and that, before 1880, 



THE NATIONAL CORPORATION PROBLEM. 1047 

Trust companies and industrial corporations were few and 
far between in comparison with the great multitude of those 
with which we have now to deal. The modern era of these 
striking features of our business life, and the development 
of the industrial Trusts which now cover the country, East, 
West, Eorth and South, had then hardly commenced. 

Yet our great corporations, and our great railway sys- 
tems are still growing and multiplying, and will continue 
to grow and multiply to meet the wants of our rapidly in- 
creasing population for generations to come, till every part 
of our vast territory is thickly settled. Railways and manu- 
factories represent our largest corporations, and are next in 
importance to our unlimited agricultural resources and 
mining interests. 

They remind us too, that while these and all other cor- 
porations need regulation by law, this regulation should 
never hamper, or interfere with, their legitimate activities 
and expansion, however strict and severe it may be in pro- 
hibiting and punishing wilful violations of law and other 
abuses of power. 

It is significant of the power and extent of our railway 
systems that these — fifty-seven of them in all — operate, or 
control, six hundred and eighty-eight subsidiaries, or jointly 
controlled railway companies, embracing 196,425 miles of 
road, with an aggregate of outstanding stock of $4,750,- 
325,000, and $8,180,780,000 of bonds, a total for both, at 
par, of $12,931,154,000. These figures are exclusive of 
stocks and bonds held in the treasuries of the companies. 

Thus nearly ninety per cent of the steam railway mile- 
age of the United States is operated, or controlled, by the 
fifty-seven systems. The remaining ten per cent of the 
country's railway mileage is composed mainly of short, in- 
dependent and disconnected lines, some of which are run 
at a loss, and many without reporting any considerable 
profit. 

Railway corporations in this country are therefore, ex- 
cept as to this unimportant ten per cent, a great consolidated 



1048 THE NATIONAL CORPORATION PROBLEM. 

force, for the fifty-seven systems that control ninety per cent 
of the mileage, are equivalent to so many Trusts, and these 
can join hands in a solid phalanx at any time for any lawful 
purpose, and practically form one great railway Trust span- 
ning the continent, a gigantic power that but for law would 
be a monopoly. 

So the National corporation problem is largely one of 
the railways, and it involves the best way for the Federal 
Government to regulate these, and all the corporations, in the 
interest of trade, commerce and the people, and to do this 
without imposing unnecessary restrictions upon their legiti- 
mate operations and development. 

The corporation problem in this country is still new and 
unsolved, but it has assumed immense national importance 
through the growth of the large industrial Trusts during 
the last twenty years. Before that they were unknown, and 
they have to a large extent revolutionized business and busi- 
ness methods in the United States. 

They resulted from the enormous and rapid increase of 
our population, industrial activity, industrial development 
and wealth, and the consequent increase of competition in 
all branches of trade. Corporations, good, bad and indiffer- 
ent, sprang up like mushrooms, and then combinations of 
corporations into larger ones took place, and we had Trusts. 

These were organized ostensibly to secure economies in 
management which, in conjunction with their large capital, 
would enable them to compete advantageously with smaller 
concerns in the same lines of business, and give them more 
or less control of their markets. 

But in doing this they of course threw many out of em- 
ployment, and forced many of their smaller competitors out 
of business. Consequently the popular sentiment against 
them at first was very strong and the cry of " Monopoly " 
was often heard. 

It was found however that the rise in prices that had 
been generally apprehended as a result of the formation of 
Trusts did not occur, at least not to any disturbing>extent. 



THE NATIONAL CORPORATION PROBLEM. 1049 

So public hostility to them quieted down, although their 
struggling and ruined competitors still felt sore over their 
rivals' success, all the more so when it was discovered that 
most of them were making far larger profits than had ever 
before been made in the same industries. If this had always 
been done honestly there would have been no reason to com- 
plain. 

The great industries dominated by Trusts included, be- 
sides petroleum and sugar refining, iron and steel working, 
copper and other metal and mineral mining, India rubber 
and tobacco manufacturing, distilling, and also many mis- 
cellaneous manufactures, in addition to those in other lines 
than manufacturing. The traders who had occupied these 
fields of industry before them looked small indeed beside 
these new corporation giants. 

Discrimination in favor of one and against another by 
railway corporations was an iniquity that built up large for- 
tunes for a few and starved and ruined many. But that, 
let us hope, has been effectually stopped forever by its ex- 
posure and denunciation by President Roosevelt and the 
Federal legislation which it provoked; and any revival of 
it should be punished with the utmost rigor of the law, not 
by fines but by imprisonment of both the giver and receiver 
of rebates. 

Fines can be easily paid by large corporations, however 
much their stockholders may suffer, but being placed behind 
iron bars is always distasteful, if not terrible, to their offi- 
cers; and it leaves a stigma that they are anxious to avoid. 

Their aversion to being disgraced in the eyes of their 
families and friends by imprisonment as criminals will al- 
ways tend to make them extremely cautious not to incur this 
risk, however willing through lack of moral scruples, some 
of them might be to violate the anti-rebate laws if they could 
do so with impunity, and however much they might be aware 
that lawlessness, apart from the question of dishonesty, is 
anarchy, and therefore unpatriotic. 

Corporation looting in its various forms, and political 



1050 THE NATIONAL CORPORATION PROBLEM. 

contributions of corporation money, are, like rebating, equal- 
ly wrong in principle, and should be punished with equal 
severity, and involve compulsory restitution. That is really 
the only way to prevent the recurrence of such wrongs by 
the unprincipled. 

Judge Anderson, in charging the jury at the trial of 
John R. Walsh in Chicago for bank frauds, said : " The law 
presumes that every man understands and foresees the natu- 
ral, legitimate and inevitable consequences of his acts. The 
color of the act determines the complexion of the intent. 
The intent to injure or defraud may be presumed when the 
unlawful act which results in loss or injury is proved to 
have been knowingly committed. " 

Many of the irregularities, abuses and questionable meth- 
ods of large corporations resulted no doubt from the hap- 
hazard speculative manner in which they were organized. 
Their promoters and organizers had always, or nearly al- 
ways, speculative objects in view in forming the combinations 
we call Trusts. They looked for their first profit in the 
stock deals involved in them, and were generally willing to 
give extravagant prices, payable in stock, for properties that 
they wished to control and bring into these new Trusts. 

This, of course, caused over-capitalization, and in many 
cases this over-capitalization was equivalent to several times 
the actual value of the properties embraced in the Trusts 
created, and in some instances to many times their value. 
Then too extravagantly high salaries were given to the men 
in control of such organizations for their services as officers. 
They were generally " on the make," working for Number 
One — that is for themselves — as well as the Trusts. 

It often followed that, in their efforts to float their stock 
and pay dividends, loose and none too scrupulous practices 
were resorted to, and more or less false and exaggerated 
representations were made as to actual values and conditions. 
So greed and graft dominated not a few of them more than 
the interests of their outside stockholders. 

They were in a position where they could help them- 



THE NATIONAL CORPORATION PROBLEM. 1051 

selves to the cream, and leave the skim milk for the investors, 
and not many of them neglected their opportunity to skim 
the cream, and to feather their nests more or less, in the 
last few years, before stricter laws were passed by Congress 
and the States for the management of corporations. 

The laxity of both the State and Federal laws with re- 
gard to corporations, till recently, permitted much to be done 
in the dark, which is now rendered impossible by the light 
of publicity that is required by the new enactments, as well 
as by various prohibitions of dishonest practices, besides 
that crowning evil, railway rebating, that were before 
prevalent. 

Campaign contributions by corporations were wrong, 
morally and legally, not because political contributions are 
wrong, but because they were a wrongful and illegal use of 
corporate money. But the controlling officers of many large 
corporations, particularly the ]STew York City Railways and 
large life insurance companies, were woefully blind to this, 
so accustomed had they been to handling corporate funds in 
their charge as if they owned them, and could do as they 
pleased. 

These transactions were almost on a par with some of 
those connected with the purchase at a fictitious price of a 
certain Street Railway — a practically non-existent line — in 
which large capitalists were concerned. Here was a flagrant 
instance — involving a diversion of half a million dollars — 
of the doings of men controlling a great street railway sys- 
tem, at the expense of the stockholders whom it was their 
duty to faithfully serve and protect. 

That many dishonest acts by men controlling corporations 
have gone unpunished is greatly to be regretted, and looks 
very much like a miscarriage of justice. But let us believe 
that dishonesty was exceptional and honesty the rule in cor- 
porate management. 

Where punishment is inflicted for infractions of the law 
involving larceny, it should be the same as for giving or re- 
ceiving railway rebates. Fines have no terrors for wealthy 



1052 THE NATIONAL CORPORATION PROBLEM. 

evildoers who violate the law for their own sinister ends at 
the expense of others. 

The popular hostility to the Trusts however, was often 
too indiscriminate. It made little or no distinction between 
the good and the bad. The Trusts were, as enlarged corpo- 
rations with large capital, a national trade development of 
our time. 

Aiming at greater production, economy and efficiency, 
through their large means and modern improvements, than 
had been possible with small concerns, they marked a for- 
ward step in that progressive industrial, commercial and 
financial march which has created our vast national wealth 
and made this country the Wonder of the World. 

But of course it was inevitable that these Trusts, with 
their large capital, and new and improved methods and 
machinery, should supersede to a great extent the old order 
of things, and take away from them the business of others 
that they competed with. It is only natural that the stronger 
competitors should more or less dominate or destroy the 
weaker, and the success of the Trusts was merely another 
illustration of the survival of the fittest. This is a law of 
Nature which it is useless to resist. 

It is therefore not against the creation of Trusts, but 
against injustice, lawlessness, misrepresentation, looting and 
other evil practices in the management of Trusts that we 
have a good right to complain, and against which the strong 
arm of the law should be always raised. A well and honestly 
managed Trust can do business as legitimately, and with as 
much or more, advantage to the public, as any individual, 
any firm, or any small corporation can. 

But there is constantly greater temptation to wrongdoing 
by those in control of large corporations than is the case in 
small ones. We have seen many instances of the abuse of 
power in these, not only in forcing the allowance of rebates 
from the railways, but in other unjustifiable ways calculated 
to get the upper hand of competitors, or kill them off entirely, 
as well as in the misuse of corporate funds for speculative 



THE NATIONAL CORPORATION PROBLEM. 1053 

purposes, to say nothing of appropriations through that too 
common form of dishonesty called graft. 

Men in high positions in corporations have often done in 
secret, in the way of chicanery what they would have been 
both ashamed and afraid to do openly. But now that the 
old practices have been exposed and the new laws require 
publicity of accounts, and have closed the door to the many 
opportunities for fraud and graft that were before open, 
through severe penalties, we have a purer business atmos- 
phere and a higher moral tone in our business life. So 
some good has come out of our corporation scandals, and pub- 
lic sentiment has been aroused against corporate corruption 
and all abuses of power. 

Corporations no less than individuals of course have rights 
which should be scrupulously respected by both our Federal 
and State legislators. But one defect in corporation legisla- 
tion by Congress, as well as the States, has often been that 
it failed to make a sufficient distinction between what may 
be called private and public corporations. It stands to reason 
that railway and industrial corporations, and all public util- 
ity companies, that have sold their stocks and bonds to the 
public, and had them admitted to dealings on the stock ex- 
changes should have their condition subjected to stated peri- 
odical examinations and publicity which would be uncalled 
for in the case of smaller corporations that had not marketed 
any of their securities, and whose earnings and affairs had 
no interest for the general public. 

The railway companies are now required by law to keep 
their books and accounts in a certain prescribed form under 
the supervision of the Interstate Commerce Commissioners, 
and this is the right kind of publicity, for it permits of no 
cheating, nor of any neglect to comply with the law. The 
record of each day's business tells the story and these books 
and accounts are all the time open to Government inspection. 
But such regulations would be unreasonable if applied to the 
small private industrial corporations. 

Honestly managed and solvent corporations have nothing to 



1054 THE NATIONAL CORPORATION PROBLEM. 

fear from publicity as to their financial condition, although 
they have a perfect right to guard their trade secrets from 
publicity, provided they are free from any dishonest or illegal 
taint. Well and honestly managed public utility corpora- 
tions are our best protection against municipal ownership, 
which in this country would be sure to involve political cor- 
ruption, and probably poor service. 

It would be a step towards socialism, and socialism in this 
country would be antagonistic to our government, our insti- 
tutions and our national progress, and should be resolutely 
resisted and frowned upon by all Americans. It is a weed 
transplanted from the hotbeds of European despotism that 
can never flourish here, for our soil is entirely unsuited 
to it. 

Publicity at regular intervals of earnings and conditions 
by railway, industrial and other corporations creates confi- 
dence where confidence is merited, while exposing weakness 
where weakness exists. By eliminating that which is un- 
sound and dangerous, it benefits the sound and the safe, and 
removes grounds of suspicion injurious to all. 

Secrecy is the defense of the weak, and they naturally 
shirk the light; but the public interests demand that all the 
large corporations submit to it, and stand or fall according 
to their merits. This applies to banking and insurance as 
well as manufacturing, trading and transportation corpora- 
tions, all, in this respect being in the same class. 

To facilitate this publicity and ensure simplicity and 
accuracy the books and statistics of corporations should be 
kept in a clear and systematic manner that any examiner 
could easily understand. I say this because in some large 
corporation failures that have occurred much irregularity 
and confusion of accounts was found. 

This not only delayed the receivers in ascertaining the 
amount of the assets and liabilities, but showed that the offi- 
cers of the failed concerns could not have been very closely 
conversant with their precise condition when they suspended. 
Bad, or careless book keeping, accounting and office manage- 



THE NATIONAL CORPORATION PROBLEM. 1055 

merit has led to many important corporation failures that 
good work in that department might have averted. 

Corporations should therefore, be careful to supervise their 
clerical forces closely, and also employ accountants to make 
periodical examinations and audits of their books, for ac- 
counting and statistics in these days have been raised to the 
importance of a science. 

Old fogeyism, wherever it still exists, should be made to 
give place to improved and time saving modern methods. 
These may be small matters to dwell upon, but a close ob- 
servance of them is necessary to good corporate management 
in this age of close competition and aggressive enterprise. 
All that is out of date, or needless, or a drag upon progress, 
or which handicaps business development should be promptly 
discarded. 

The political influence of large corporations has so far not 
received as much consideration as it deserves. But it is a 
factor in our State and national business life that is more 
and more making itself felt in an unobtrusive but none the 
less effective way. 

We have seen this manifested in the strong and numerous 
protests, emanating from this source, against the national 
government and the interstate commerce commission con- 
senting to the general rise of freight rates conditionally 
agreed upon by the Eastern and other railways. In making 
these protests to President Roosevelt the corporations are 
well aware that he can control the action of the interstate 
commissioners in the matter, and by a word cause them to 
either give or refuse permission to raise railway rates. They 
know too that his keen political observation and insight will 
cause him to weigh and consider with the greatest care the 
effect of the administration's course in consenting, or refus- 
ing to consent, to this inconsistent proposal to raise railway 
freight rates in such a period of trade depression as this, 
when more than 413,000 cars are idle. In view of the Presi- 
dential Campaign, and the issue to be decided at the polls 
next November, not merely by the politicians, but by the 



1056 THE NATIONAL CORPORATION PROBLEM. 

people, he will not underrate the importance of the railway 
corporation question as a political factor. 

We saw that the President's communication to the inter- 
state commissioners a short time ago directing an investiga- 
tion by them in relation to the need of the proposal of the 
Southern railways to reduce wages, resulted in an immediate 
abandonment of their announced plan to reduce them, and 
in fact all the railways were similarly influenced by that act 
of his. He knew that the reduction in one section would be 
the entering wedge for a general reduction, and perhaps a 
strike. 

So the railways switched off the reduced wages line to the 
increased freight line, thinking that the President, from what 
he had said, as he surveyed the situation from his political 
observatory, would prefer the alternative of higher freight 
rates to lower wages. Here comes the rub. It is a two- 
edged political sword that President Eoosevelt, above all 
others, will see requires to be very cautiously handled. 

Without g?eat care in this difficulty the administration 
might find itself between the upper and the nether millstone 
of a very ugly question, and in active antagonism with 
either the large corporations and the whole mercantile com- 
munity, on the one hand, or the railways, on the other, with 
both sides bringing all their political influence and artillery 
into play. 

Here would be an acrimonious contest that could not fail 
to affect political results in November. The President would 
very naturally be anxious to avert it, but how to reconcile 
the two opposite courses of saying yea or nay to the railways, 
and secure harmony between them and Labor, is a problem 
hard to solve. 

In connection with the proposition agreed to by the officers 
of the Eastern trunk railways to advance freight rates from 
ten to fourteen per cent, it is well to consider that the gross 
earnings of all reporting lines in February showed a decrease 
of twelve and one half per cent from those of last year, and 
that in March the decrease was 14f per cent, the result of 



THE NATIONAL CORPORATION PROBLEM. 1057 

the prevailing industrial depression, particularly in the iron, 
steel and coal trade and the ~New England cotton and woolen 
milling industry. 

The proposed increase would, of course, have to be added 
to the cost of the commodities carried, and saddled upon the 
consumers. It was therefore to he expected that a flood of 
indignant protests would come from these, as well as from 
large shippers and the rank and file of the mercantile com- 
munity. They have urged the injustice of such an advance 
in these hard times, and in the teeth of an average contrac- 
tion of fully twenty-five per cent in the demand for goods. 
But the railways in reply point to the refusal of the U. S. 
Steel Corporation and other large trade combinations to lower 
their prices for railway materials, as well as to the political 
and other work of the Labor Unions, at Washington and 
elsewhere, in support of their determination to keep wages 
up to the highest figures of prosperous times, refusing mean- 
while to listen to any terms of wage readjustment to the situ- 
ation as it is. These are extenuating circumstances, but two 
wrongs do not make a right; and the best way of adjusting 
these differences is a difficult corporation and labor problem 
of itself. 

It may surprise some to learn that the great power concen- 
trated in the President's hands by Congress has made the 
great corporations, including the railway companies and 
banking institutions, ambitious and eager to control the Fed- 
eral Government itself, and they are resolutely working to 
control it as far as they can by the force of capital, but as 
unobtrusively as possible. They know that their designs to 
make the money power supreme would arouse popular indig- 
nation, so they are engaged in a still hunt, and Samuel J. 
Tilden used to say that this is what wins in politics and a 
political campaign. 

The Government control of the Trusts, the railways and 
other corporations has become so great that it is hardly to be 
wondered at that the great object that they have now in view 
should be to control the government's policy, and already 



1058 THE NATIONAL CORPORATION PROBLEM. 

they are sub rosa powerful political machines. In this con- 
nection it is significant that some large railway and banking 
interests have identified themselves with the Presidential 
movement. Every fresh extension by Congress of the Pres- 
ident's power over corporate interests has made the large 
corporations — industrial, railway and financial — with their 
enormous capital and resources, more and more bold and 
determined in their efforts to control the Presidency, if in- 
deed that is possible; and this motive underlies a great and 
growing amount of corruption in our National politics. 

We can therefore see in the attitude and views of the great 
corporations, with their wealth and political influence, a pos- 
sible menace to our Republic and its free institutions. 

This is a matter of vast and yital concern to our citizens, 
and it is high time that their serious attention should be 
called to the fact that the powers with which the President 
is invested over the business of all classes of corporations 
have become so extended and far reaching that the Trusts 
and their railway and financial allies, are ready to sacrifice 
any moral principle, and pay any price within their power, 
to control the policy of the Federal Government. 

So the greatest of all the National corporation problems 
we have now to deal with is how to curb and regulate, with- 
out injustice, the increasing political power and pernicious 
political activity of these and other corporations, and prevent 
them from accomplishing their great object, Government con- 
trol, for this indeed would be a National calamity. 

To President Roosevelt we are almost entirely indebted 
for the development we have witnessed in the National con- 
trol of corporations under the authority of that provision of 
the Constitution which invests Congress with the power to 
regulate commerce between the States. This was a great task 
well performed, and only second to it in importance has been 
his activity in promoting Congressional legislation for the 
investigation, conservation and increase of the country's 
National resources, including the irrigation of arid regions, 
the establishment in the public domain of forest reserves, 



THE NATIONAL CORPORATION PROBLEM. 1059 

which had been too long neglected, and the extension and 
increased efficiency of the geological survey. 

Closely allied to those National interests and the Federal 
management and control of corporations has been the Presi- 
dent's direction of the work of the Department of Commerce 
and Labor, the act creating which provides that it shall be 
its duty " to foster, promote and develop the foreign and 
domestic commerce, the mining, manufacturing and fishing 
industries, the labor interests and the transportation interests 
of the United States." 

As all the business of the country outside of banking and 
finance, is practically covered by this Department, its im- 
portance can hardly be overestimated, especially in relation 
to the great corporations; and it is in co-operation between 
these and the commercial organizations of the United States, 
in common with all the other designated business interests of 
the country, and this branch of the Federal Government, 
that harmony and good corporate management can be best 
promoted, and the political power and aspirations of the 
Trusts, the railways and the other corporations be effectually 
regulated and permanently curbed. To this result that De- 
partment's energies should steadily tend, for the political 
domination of this country by Trusts and the money power 
would be an intolerable evil, however much it might be 
hidden and disguised. It would be inimical to our form of 
government, and the spirit of all American institutions, and 
to ward off this threatened danger, by nipping it in the bud, 
is a public duty that the government owes to the people. 

It is indeed likely to become our great National corpora- 
tion problem ; all the other problems relating to the Trusts, 
the banks and the railways being subordinate to this in im- 
portance, for it aims at political power for Capital, which 
would undermine the very foundations of our great and 
glorious republic — the government for which the patriots of 
the American Eevolution fought so bravely at Bunker Hill, 
and then, crowned with victory, made 1776 glorious with the 
Declaration of Independence. 



1060 THE NATIONAL CORPORATION PROBLEM. 

But forewarned, forearmed, and public opinion the great 
court of appeal, will always govern and keep the Trusts as 
well as all our other great business interests in line for the 
advancement of our National welfare and the prosperity of 
the people. 



CHAPTER XC 

WHY I AM AN AMERICAN. 

I came to this country from England over fifty years ago, 
expecting to stay for merely a short visit. I had barely 
learned the localities of the public buildings and the princi- 
pal streets, when I began to perceive the possibilities that 
presented themselves to a young man, who had the courage 
to push, to compete for a place in the race for wealth and 
position. I liked the hustle and the bustle that contrasted 
so vividly with the slow and easy style which prevailed in 
my native country. I could not escape being drawn into the 
spirit which surrounded me, and I made up my mind that 
I would make my stand in life in 'New York, and I sought 
and found employment. Fortunately I had letters of intro- 
duction to people of culture and refinement, so my social sur- 
roundings were both attractive and beneficial. In a few 
years the Civil War broke out and the leaven was thereby 
added to the liking I had for the flag which floats for free- 
dom, and I became a more ardent American than though 
this had been my native soil. I had the good fortune to 
meet the great men of those days and they whetted my appe- 
tite to rise to their level, and much of my success is due to 
the quiet influence they exerted upon my young mind. When 
I landed in New York, most of what is now the great West, 
was boundless prairie or dense forest, but even then the 
indomitable spirit of people around me yearned to subdue 
this wilderness and make it blossom and bear fruit. Million- 
aires were few in those days and truthfulness and honesty, 
combined with a willingness to work, were the necessary 
requisites to enable a young fellow to succeed. The fact that 



1062 WHY I AM AN AMERICAN. 

this was a government for the people, and by the people, did 
much to determine me that here I had found the promised 
land. No aristocracy to contend with but the aristocracy of 
brains and courage; no traditions of centuries to hang be- 
tween you and your right to toe the scratch with any man. 
The country was growing beyond its population and immi- 
gration was invited in such an attractive way that the desir- 
able classes from all over Europe were drawn to our shores. 
The fact that men born in humble life had become some of 
the world's leaders proved the possibilities that might come 
to any one who cared to try and who had the courage not to 
know when he was beaten. In this country Congress has 
always made, and is still making, laws that benefit all kinds 
and conditions of men who behave themselves. Before the 
law neither blue blood nor family tree protects any man who 
violates the statutes, for all are free and equal. This nation 
has never fought for conquest of territory and wherever our 
flag floats it has a moral and undisputed right to do so. 

The foregoing is but a summary of the volumes I might 
add to the reasons why I am an American. One more is that 
I cannot help being an American and I don't want to. 

Henry Clews. 



CONCLUSION. 

IN conclusion I wish to ask public indulgence on account 
of omissions. 

There are many brilliant financiers and skillful operators 
of the younger generation in Wall street who have thus far 
shown that they are probably destined to a prosperous, and 
in some instances, an illustrious career. 

Again, there are others of various ages and long experi- 
ence, whose achievements have been of a quiet, unostenta- 
tious character and whose business lives and operations 
have been conducted with great reserve, yet with marked 
success. 

Although these two classes have not yet done much to 
make their existence conspicuous in the public eye, while 
some of them, through excess of modesty, perhaps, have 
even shunned publicity, yet their lives have been replete 
with noteworthy events and the acquisition of very useful 
knowledge which, if preserved and recorded, would be 
highly interesting in the present, and probably not un- 
worthy of being transmitted to the future. 

I have a considerable number of these clever and worthy 
gentlemen in " the volume of my brain/' for whom I have 
no space in this book, as it has already exceeded the dimen- 
sions which I had originally designed, but in an additional 
volume I intend that they shall be duly remembered ac- 
cording to the best of my humble ability and my oppor 
tunities of forming a just estimate of their deserts. 



THE WALL STREET 
POINT OF VIEW. 

By HENRY CLEWS, LL.D. 



What this Book Contains. 

Its Remarkable Table of Contents. 

Wall Street Itself. 

Wall Street as a Gauge of Busi- Trusts and Corporations. 

ness Prosperity. The Art of Making and Saving 

The Study of the Stock Market. Money. 

Money and Usury. Business Education. 

The Railroad Problem. False Men and Methods on the 

Management of Industrial Enter- Street 

prises. Panics and their Indications. 

Wall Street and the Government* 

Washington Domination in Fin- Tariff for Prosperity Only. 

ance, Speculation, and Business. Foreign Trade and Free Trade. 

The Chief Magistrate. Retrospects and Prospects. 

First Cleveland Administration. The Trans-Missouri Case. 

The Harrison Administration. The Laws Relating to Trusts, 
Second Cleveland Administration. Corporations, and Railroads. 

Mr. Cleveland Personally Consid- Currency Legislation. 

ered. Prophetic Views on Silver. 

Significance of Wilson Tariff Law. President McKinley's Policy and 
A Batch of Legacies. the Nation's Future. 

Wall Street and Social Problems. 

The Masses and the Classes. The Physical Force Annihilators. 

A Question of Good Citizenship. The Annihilators' Methods. 
Labor Unions and Arbitration 

Wall Street and International Affairso 

Peace and Prosperity. The Venezuela Message Panic 

The Baring Failure. Our Nation's Credit 

Our Nation's New Departure. 

1 



If any man understands fully Wall Street and its Point of View, that 
man is Henry Clews the veteran banker, whose sensible sayings about 
business have been famous for years. 

This book is a lively discussion of the business interests and the 
politics of the country, all from the point of view of the men who make 
Wall Street the real business center of the United States. 

The four parts of the book show its unique scope : Wall Street Itself. 
Wall Street and the Government. Wall Street and Social Problems. Wall 
Street and International Affairs. No other book covers that ground. 

Wall Street itself receives a portrayal astonishing to nearly every- 
body. Speculation plays but a trifling part compared with the enor- 
mous amount of the legitimate business of the country which centers 
there. Wall Street is the hub of American business, and the farmer 
needs it as much as his plough. 

The maxims of modern success in business are crisply told. How to 
get rich and yet be honest is the subject of one of the brightest chapters. 
The chances of young men to make fortunes are'set forth. 

All the business problems which government has to solve are dis- 
cussed. The Trusts, the Tariff, the Banks, Silver, Expansion— these 
each have specific attention from the clear-headed business man's point 
of view. 

What all the Administrations have done to business, from 1884 to 1900, 
is reviewed in detail, with racy style, and with profound good sense. 

Mr. Clews discusses all the problems that business men talk about 
every day, and he gives his views directly, definitely and picturesquely. 

Whether you agree with him or not, you cannot afford to pass by 
his book. It is a searchlight on business in its present day relations. 

Busy business men as well as women who care for business will take the 
time to read the book. Ask your bookseller for it. Price, $1.00. 

306 Pages, with Photogravure Portrait. 



What the Editors Say of this Book. 

Seldom does a published book produce so strong an impression upon 
the newspaper press, and elicit such a large number of favorable remarks 
as has been the fortune of The Wall Street Point of View. Following 
are a score or more of forceful comments, excerpts from long reviews, 
and selected as typical from a great array of notices as hearty as these. 



The book meets a want that has long been felt in our too meager literature of finance. The 
feet that it is written in an unusually entertaining style does not detract from its serious value. 
— Journal of Commerce, N. Y. 

a 



Thii able and exhaustive economic treatise by Mr Clews is not only the point of view of the 
banker and broker, but that of the large wholesale and retail merchant, and the wide-awake 
manufacturer. The problems discussed in this book are of great importance. The book will 
help its readers to a clearer understanding of the problems of business and government, and 
will be to many a liberal education on economic matters. — Boston Journal. 

" The Wall Street Point of View " is a valuable contribution to the literature of business — 
Brooklyn Eagle. 

There is entertainment as well as instruction to be derived from Mr. Clews's "Wall Street 
Point of View."— The Sun, N. Y. 

The volume is full of instruction for those who are disposed to try their fortunes in the great 
center of speculation. — New Haven Palladium. 

This book, by a man who has himself succeeded, is colloquial, wise, witty, and full of anec- 
dote. Few men will care to pass by the chapter on "Art of Making and Saving Money" — 
Louisville Courier Journal. 

Interesting to all is the chapter in which is shown that Wall Street is the gauge of business 
prosperity. — Albany Times- Union. 

The book is a masterpiece of its kind, an attractive and taking discussion of what, in the 
hands of another, might have been made a very dry and uninteresting theme — Worcester Spy 

Mr. Clews' book is full of valuable information and good advice, and young men will find 
it amply worth reading — Atlanta Constitution. 

Mr. Clews takes broad American views on all the questions considered in "Tha Wall Street 
Point of View" and treats them in a most intelligent and entertaining style. — Indianapolis Journal. 

Mr. Henry Clews has just published the most interesting, comprehensive, suggestive and 
valuable book on Wall street we have ever seen. — Wall Street Daily Investigator. 

A well-named book. Mr. Clews is the incarnation of the Wall Street spirit, and his forcible 
views are exceptionally quotable both to the friends and to the enemies of the ideas he cham- 
pions.— The Outlook, N. Y. 

Mr. Clews has added a romantic volume to the financial library — Public Ledger, Phila. 

A book that has created a profound impression in New York, and is destined to influence 
thinking men all over the country Mr. Clews's style is so simple and lucid that he can be 
understood by the veriest novice. — Chicago Times-Herald. 

No man living, perhaps, is better qualified to discuss the ways and methods from the Wall 
Street financier's point of view than Henry Clews, and his book is eminently readable. — Boston 
Transcript. 

It is probably the most comprehensive work that has been written for the popular reader 
of business affairs in New York's famous thoroughfare. Mr. Clews has the gift of expression, 
and the book is full of anecdote and incident. — St. Louis Globe-Democrat. 

Mr. Clews is well fitted for the authorship of such a work, and those who are interested in 
"The Wall Street Point of Visw" will find this volume highly entertaining if not edifying. — 
Baltimore Sun. 

Mr. Clews writes very interestingly of the Cleveland Administration. His appreciation of 
which is eminently fair, and may be taken as anticipating the verdict which history will pronounce 
upon one of the most remarkable men in contemporu-y public life. — New Orleans Picayune. 

Mr. Clews endeavors to disabuse the popular miad of some of the cherished errors it holds 
concerning the great financial heart of country. — Detroit Free Press, 

In the matter of the practical workings of a Protective Tariff in relation to prices of com- 
modities, " The Wall Street Point of View " is also the common-sense point of view. — American 
Economist, N.Y. 



Henry Clews' book on Wall Street and its point of view is the first book to deal exhaus- 
tively and instinctively with a subject of which many business men have but a superficial knowl- 
edge — Brooklyn Times. 

The chapter on " False Men and False Methods on the Street" is well worth the attention 
cf all "lambs" the country over. — Evening Ttlegram, N. Y. 



New York Times, Nov. JO. IQOO. 

WHAT WALL STREET THINKS. 

Persons who imagine that the history cf Wall Street is solely chronicled in the financial 
columns of the daily press make a very serious mistake. Regarded as an institution, Wall Street 
creates and executes schemes of gigantic proportions which in their ultimate development hardly 
bear a single tag of the money market. Wall Street, too, has opinions on all great national and 
international questions, opinions that are neither political, diplomatic, sociological, nor even 
economic, but which combine all four elements in an ideal proportion. Thus it is that no one 
who desires to have a broad and thoroughly comprehensive idea of the great questions of recent 
days can afford to ignore the opinion of Wall Street What this opinion is Mr. Henry Clews 
has told in an interesting manner in his book. " The Wall Street Point of View." 

There is hardly any other publication with which this volume can be compared. An anal, 
ogy might be offered if the corps diplomatique of the world should issue a review of political 
events from a point of view essentially diplomatic. But Mr. Clews does not merely relate what 
Wall Street thought about great political or diplomatic events — Mr. Cleveland's tariff message, 
the Wilson or Dingly tariff, gold vs. silver, the Veneruelan question, legislation against trusts, 
and events showing the relations between labor and capital, between the employee and the 
employer — but he discuses in its rudimentary form the question of finance in a way that cannot 
but be of profit and aid to the most humble citizen and father of a family. The chapter on "The 
Art of Making and Saving Money " and "Business Education" are just as interesting as the 
pages on great world topics, and to some they are far more important. There is not a dull line 
in the book; even the figures are eloquent. 



From the Baltimore American. 

WALL STREET'S FASCINATIONS. 

Wall Street is cne of the most fascinating points of interest in America's business domain. 
Its commanding position in the world of finance invests it with an importance not only of do- 
mestic concern, but it is also a brilliant centre towards which Europe's eyes are eagerly turned ; 
for that reason there is always a ready appetite to learn about its mysteries. Every attractive 
description of its operations is usually read with great popular relish, and the public is always 
on the alert to devour every book pertaining to its workings which is really worth reading. 
Perhaps the one which has enjryed the best of early and well- deserved successes is "The Wall 
Street Point of View," by Mr. Henry Clews. The author's name of itself is one of its chief 
recommendations of excellence. Mr. Clews is a veteran banker, and his lifework amid Wall 
Street's dramatic vicissitudes has more than equipped him for the task he has assayed. No- 
body is surprised, therefore, to note that the press universally pronounces his book a splem 
success. 

This book is a lively discussion of the business interests and the politics of the country, all 
from the point of view of the men who make Wall Street the real business center of the United 
States. The four parts of the book show its unique scope : Wall Street Itself; Wail Stre 
and the Government ; Wall Street and Social Problems ; Wall Street and International Affairs. 
No other book covers that ground. All the business problems which government has to solve 
are discussed. The trusts, the tariff, the banks, silver, expansion — these each have specific 
attention from the clear-headed business man's point of view. 

What all the administrations have done to business from 1884 to xooo is reviewed in detail, 
with racy style and with profound good sense. 

Mr. Clews discusses all the problems that business men talk about every day, and he gives 
his views directly, definitely and picturesquely. 



FIFTY YEARS IN WALL STREET 

By Henry Clews, LL.D. 

1100 Pages. 68 Illustrations. 

Price, $3.00. For Sale at all Bookstores. Orders for books and payments 

therefor may also be sent to Irving Publishing Co., P. O. Box 1915, 

New York, or to Messrs. Henry Clews & Co. 



EIGHTH EDITION. 



Henry Clews' book i« one of the most valuable and solid contributions of the present day 
to the financial literature of the country. — N. Y. Telegram. 

The book Mr. Clews has written is a vast panorama of Wall Street life. — Journalist ', N. Y. 

As a record of the affairs of Wall Street, Mr. Clews' book is to the financial world what 
James G. Blaine's "Twenty Years in Congress" is to the political world; though our own 
private opinion is that the style is better and the bias less pronounced. — Court Journal, N. Y. 

No book published in many years has excited the interest, repaid its perusal, and is more 
profitable. — Independent, H'burg. 

Mr. Clews has rendered a great service to the public by his valuable and trustworthy rem- 
iniscences. — Mail and Express. 

A complete treasury of information — financial, historical, biographical and anecdotal. — 
Post, Washington. 

It is the best book on Wall Street that has yet appeared, and one may get from it an insight 
into the practical methods of the speculative world second only to that obtained through actual 
experience. — Sentinel, Milwaukee, Wis. 

There has probably been no book published in this country that will attract the attention 
of business circles more than this one. — Ohio State Journal 

How to make money ! How not to lose it 1 No such complete and comprehensive exposi- 
tion on the subject ever given. — N. Y. World. 

One of the most important and interesting books ever written on the subject. — Journal. 

The volume is written in easy flowing style, and its facts are of the kind to interest the mil- 
lions of readers of all classes. — Inter-Ocean, Chicago. 

There is not a dull line in the book, while much of it is as thrilling as a romance from the 
pen of a great novelist. — U. S. Treasury Counterfeit Detector. 

Mr. Clews' remarks on business training are full of wisdom and practical philosophy.— 
Herald, Boston. 

The book is a most entertaining collection of facts, arguments and anecdotes covering more 
than a quarter of a century. The work is one of rare interest. — Herald, Chicago. 

The book should be in the hands of every man, young or old, and should be read carefully 
b> every student of the financial history of this country. — Indicator, N. Y. 

Every business man in the United States ought to have a copy of that remarkable book 
s< Twenty-Eight Years in Wall Street," by Henry Clews, the well-known banker. This book 
<>' ns many secrets connected with the business and business men in the metropolis of the 
..ted States, and it is a most valuable history of events in the money center of the Republic. 
Mr. Clews writes in a philosophic vein, and his book ranks in importance with the best financial 
writings of the century. Probably no other man could tell so much, or tell so well about Wall 
Street and its scenes during the past quarter of a century. The volume contains over 700 pages 
and every person desirous of knowing something about the inner workings of Wall Street can 
learn it in this book. — The Buffalo Iron Industry Gazette. 

It is indeed a perfect romance. — National Republican, Washington. 

5 



HENRY CLEWS & CO. 

AMERICAN AND FOREIGN BANKERS 

(Members of the New York Stock Exchange) 

11, 13, 15 and 17 Broad Street, and 35 "Wall Street, New York 

BRANCH OFFICES 

With Private Telegraph Wires to Head Office, also to Boston, Philadelphia, 
Baltimore, Washington, and Chicago: 

353 Third Avenue, corner Fifty-Seventh Street (Nineteenth Ward Bank Bldg) 
ii22 Broadway and 20a Fifth Avenue, corner Twenty-Fifth Street 

487 Broadway, comer Broome Street (Silk Exchange Bldg) 
96 Warren Street, corner Greenwich Street 
16 Court Street (opposite City Hall), Brooklyn, L. I. 

708 Fourteenth Street, N. W., Washington, D. C. 

United Bank Building, Paterson, N. J. 

1 Custom House Street, Providence, R. I. 



A GENERAL DOMESTIC AND FOREIGN BANKING BUSINESS TRANSACTED. 

Deposit accounts received from corporations, firms, and individuals subject to cheque on 
demand. 

Interest allowed on all daily balances and credited monthly. 

Special rates of interest allowed on time deposits, governed by the condition of the money 
market. 

We act as trustees for out-of-town banks and trust companies in loaning money on approved 
New York Stock Exchange collateral. 

Collections of notes, drafts, and coupons made in all parts of the world and promptly 

remitted for. 
Parties doing business with us may telegraph orders and instructions at our expense. 
Our private telegraph code, and blank cheque books, will be furnished upon application. 
Coupons and interest paid over our counter ; we also act as transfer and financial agents 
for corporations. 

All investment orders from institutions, trustees of estates, and capitalists, 
will receive special attention. 

Orders executed on the New York Stock Exchange for investment or on 
Part Payment. 

Also on the Philadelphia, Boston, and Chicago Exchanges. Private telegraph wires to each 
city. 

We are prepared to bring out by subscription, both in this country and in Europe, high-grade 
Bonds and other first-class securities. 

The Banking Department of our house is conducted the same as a National bank. Our firm 
was organized in 1877, and the firm, also the individual members of it, are pledged under 
imperative copartnership obligations to take no speculative risks on their own account. 

All business of whatever nature placed in our hands will be rigidly regarded by our firm as a 
trusteeship, and will receive accordingly our faithful protection and painstaking attention. 

High-grade investment securities Bought and Sold on the most favorable 

terms. 

WE DRAW AND ISSUE 

BILLS OF FOREIGN EXCHANGE LETTERS OF CREDIT TO TRAVELERS 

In Pounds, Francs, and Marks, in sums to suit. Available in All Parts of the World. 

6 



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